And so the story of the moral implosion of the British prison system comes to this: we are imprisoning people in toilets. Doncaster prison – run by the private firm Serco – was designed to hold 800 people, but it now pens in more than a thousand. So the governors have put beds in the toilets, and detained people there for more than 18 hours a day, week after week. In toilets. In Britain. Today.

There are now two prison systems in this country. There is Her Majesty's Prison Service, where mad and broken people are warehoused alongside the genuinely violent in cramped and fetid cells. Then there is the Fantasy Prison System, implanted by the press in the public imagination, where pampered prisoners are given foot massages while watching flat-screen TVs.

No matter how many prisons I visit, from Wormwood Scrubs to Feltham Young Offenders Institute, I cannot find the holiday camps. Instead, I find prisons that clunkingly conform to every "tough" demand of the right – and are therefore placing you and your family in greater danger.

Allow me to explain. When our prisons contained 40,000 people, back in 1993, they managed to make 47 per cent of the inmates go straight. But today – after cramming twice as many people into almost the same space – that rate has dramatically plummeted to just 25 per cent. The rest graduate to the same or worse crimes.

We know what makes criminals less likely to reoffend. We have known for years, from study after study after study – but drunk on rhetoric, we are speeding in the opposite direction. So let's go through the recipe that really turns prisoners into law-abiding citizens, abandoned in the mid-1990s when Michael Howard got Britain smoking the crack-down crack.

Ingredient One: Transfer the mentally ill into secure hospitals. The first thing that strikes you in any prison is how many of the people there are insane. One 60-year-old man diagnosed with serious brain damage staggered up to me in the bowels of Wormwood Scrubs thinking I was his father. The Government admits 13 per cent of our prisoners have schizophrenia and 70 per cent have one or more diagnosable mental disorder. I could fill this newspaper with descriptions of prisoners who stab their own necks with knives or set fire to themselves at Her Majesty's Pleasure.

There is another way. The state of Pennsylvania was facing the same prison problem as Britain – so they decided that if the police arrest a mentally ill person, he should no longer go into the normal courts system. When, say, Sally Judson – a diagnosed schizophrenic who developed a heroin habit – was picked up for disorderly conduct recently, she was taken to a mental health "court". Instead of jailing her, they drew up an action plan with her. They found her a doctor, a therapist and a waitressing job. If she relapses on heroin, there is a rehab place waiting for her. This system works: mentally ill people have a 55 per cent reoffending rate in the normal courts, but in the mental health courts it is just 10 per cent.

Ingredient Two: Make sure prisoners stay in touch with their families. You can hear the Gaunt-groans and the Littlejohn-lies now: who cares if some criminal bastard can't speak to his baby-mother? But the evidence shows this is the single biggest factor in keeping a criminal from reoffending. If you manage to keep your partner, you are 20 per cent more likely to stay out of jail. But our prisons actually militate against this. Because of the severe overcrowding, some 37,000 prisoners are being held more than three hours' journey from home, and 5,000 are being held more than six hours away. Their mostly broke families can't afford the long journey. Telephone? BT charges up to seven times more to call home from prison than it would cost from a normal phone box. Far away and expensive to phone, nearly half of male prisoners currently lose touch with their families.

Ingredient Three: Make sure prisoners aren't illiterate and homeless when they walk out the prison gates. When they arrive, a third of prisoners can't read or write a word. They almost invariably leave as they came. The Adult Learning Inspectorate found fewer than 8 per cent of prisoners are taught to read and then given meaningful work that could lead to a job on the outside. Worse, one-third of prisoners are released to "No Fixed Abode" – a friend's couch, if they're lucky.

In Liverpool prison, I saw a brilliant scheme where prisoners are taught construction skills – and then use them to do up an abandoned council house to live in when they leave. It's a crime-busting double whammy: work skills, and a house nobody else wanted. Why isn't this being done in every prison in Britain?

Ingredient Four: Medicalise prisoners' drug addictions. Some 12 per cent of prisoners are heroin addicts, imprisoned either for possessing the drug or committing property crimes to feed their ravaging need. Wouldn't it be better to spend the £40,000 of jail money to put them in rehab? True, heroin addiction is so powerful that the even the best rehab in the world fails with 80 per cent of addicts. But for them, we can prescribe a clean, legal supply for £4,000 a year. Then they can lead healthy lives: Arthur Conan Doyle and the father of modern surgery, William Halsted, did. When the Swiss did this, burglary fell by 70 per cent.

Ingredient Five: Make sure prison is only for violent and sexual offenders. There are about 16,000 vaguely sane people in our jails who have committed violent or sexual offences. They need to be banged up while they are rehabilitated, for however long it takes. But if they are crammed in with 64,000 others – the shoplifters and cannabis dealers – nobody gets any treatment and nobody gets any better.

Indeed, the evidence shows the opposite happens. Professor Carol Hedderman has calculated that the growth in the prison population is due to a huge rise in short sentences of six months or less. They are all for crimes that used to be dealt with by community service – like the two teenage boys in Deerbolt who have just been sentenced to 15 months in an adult jail for graffiti. That's long enough to put in place all the factors that drive up crime – they lose their job, their house and their girlfriend, and their debts spiral – but not long enough to teach them anything, even if we tried. This is the reason for the surge in reoffending.

Yet still the Government builds more mega-prisons, while the Tories yelp for them to go even further and faster. Why? Every politician wants to be seen as the Toughest Daddy, cheered on by a press that raves against a prison system that doesn't exist. But the "tough" approach – shove 'em in the toilets, teach 'em nothing – produces more crime. The macho swagger hides glass testicles. No: we need to show this isn't about soft vs. tough, but about smart, crime-busting policies vs. dumb, crime-boosting policies.

But for today, reason and evidence remain locked away in the prison toilets. Isn't it time we let them out?

j.hari@independent.co.uk