Mr Duncan Smith searches for rehabilitation

The Conservative Party has invented a startling new concept. It is called - say it slowly - re-hab-il-ita-tion. Yes, the party of Margaret "legalising cannabis would be like legalising murder" Thatcher has finally seen that drug addiction is an illness, not evidence of demonic possession. Perhaps they have looked to their hero, George Bush, who is a recovered drug user (his poison was alcohol, although he dabbled with cocaine) and has risen to the toughest and most responsible job in the world.

Whatever their motives, the Tories now admit that banging up heroin users in prisons where they can get even more heroin, and have nothing better to do, should not be the Government's first resort. They propose to create 20,000 new rehab places for hard-drug users (we currently have 3,000 places to serve 500,000), and to offer rehab as an alternative to prison.

It would be wrong to carp. It is genuinely surprising - and impressive - to go to the Tory party website, see an image of a filled syringe and realise that it is not followed by some hysterical Reefer Madness-style propaganda. Oliver Letwin, the shadow Home Secretray, is plainly sincere, and this is a commendable attempt to look at an area of public policy that has too long been a bog of stale clichés and outdated thinking.

Moaning about the initial cost - around £400m - is misplaced. Rehab is good policy because it saves money in the long term: recovered addicts do not clog up the police, the courts, the prisons ... the statistic most commonly used by anti-prohibition campaigners in the US is that each dollar spent on rehab saves seven further in the criminal justice system. It is a bracing condemnation of the Home Office under David Blunkett that the Tory policy on drugs is now far more progressive than Labour's.

But before we get carried away, there are some important points to bear in mind. IDS, in his speech yesterday, croakily listed the places in Britain worst afflicted by drug addiction: Chapeltown, Hackney, Gallowgate, Moss Side, Easterhouse. Notice anything? They are also the poorest parts of our country. There is a direct and obvious link: take a kid, raise her in misery, deny her access to any social opportunities, bore her senseless, and just wait for the heroin to look appealing.

No drugs strategy can be credible without a parallel and vigorous anti-poverty strategy. But the Tories - who, when in government, both catalysed and denied the existence of these slums - have no credible plans to tackle poverty at all. The Blair government's under-rated anti-poverty strategies are having a real effect: the minimum wage, the New Deal, the working families tax credit and massive benefits increases for working families have transformed the council estate my sister lives on, and plenty of others across the country. Yet the Tories declare that they want to reverse almost all of these policies: a recipe for creating far more junkies.

Even more importantly, all the available research shows that only around 5 per cent of addicts want to quit at any given time. If you hang out with junkies, alcoholics or cigarette smokers, they don't sit there longing for the day they're "clean": they enjoy their intoxication and seek some more.

It is incredibly important that rehab is available for those who want it, and a scandal that it isn't there at the moment; but even with the best rehab facilities in the world, we would still have to live alongside the 95 per cent of addicts who don't want it. They will still burgle, beg and mug to get their fix, unless we do one of two things.

First, we can legalise hard drugs, massively bringing down their price because they would no longer have to pass through 15 different handlers between Colombia and the streets of London, each taking their own cut. A reduced price means far less theft. Second, we can return to the British policy of the early 1960s and prescribe heroin.

At the moment, only around 500 extremely problematic users are given their heroin by the state. (David Blunkett, to be fair, has recently increased this number, albeit very slightly.) Mass heroin prescription would slice great chunks of crime out of the worst estates in Britain: users who now steal out of desperation, because addiction is ravaging their bodies, would no longer have a motive.

The ideal drugs policy would be a mix of both these strategies, with a dash of terrific rehab, paid for by taxing the profits of the drugs market that, because of prohibition, currently go to criminal gangs. To people like Ann Widdecombe and David Blunkett who say that this would lead to a "drugs culture" and masses of people using drugs, all I can say is: where are you living? We already have a drugs culture, and it ain't going away. No country on earth has been able to stamp out drug use that is so widespread and popular. No drugs is no option.

Yet IDS was still clinging yesterday to the silly language of "winning the battle against drugs". This is risible. The real choice is between safe, legal drugs twinned with low crime, or dangerous, illegal drugs and the resulting crime epidemics. Rehab matters, and if the Tories are serious about providing 20,000 places for addicts, then 20,000 lives will be transformed. But this is only one - comparatively small - dimension to drugs policy. Now, if the Conservative Party had the nerve to say that, I'd be impressed.