The Prime Minister's "tough but intelligent" approach to a rehabilitation revolution risks being undermined by overcrowded prisons and budget cuts, campaigners have warned.
David Cameron said all but a small number of high-risk prisoners will receive help to turn their lives around and break the cycle of reoffending by the end of 2015.
But the long-awaited speech comes after Chief Inspector of Prisons Nick Hardwick said politicians wanting a rehabilitation revolution faced a stark choice - "reduce prison populations or increase prison budgets".
He highlighted conditions at Britain's largest jail, Wandsworth prison in south west London, where excellent workshop facilities stood empty while prisoners watched TV in their cells because there were no resources to move offenders from one to the other.
Vicki Helyar-Cardwell, director of the Criminal Justice Alliance which represents almost 70 organisations, said prison overcrowding and budget cuts mean that rehabilitation is being undermined.
Mr Cameron admitted there was "no blank cheque" and there was "much less money than there used to be", but he said the Government's ambitions could still be realised through intelligent reforms. As part of what the Prime Minister called a "tough but intelligent" approach to criminal justice, he said there will be a major extension of payment by results for companies, charities and voluntary groups who help offenders escape a life of crime. It is such a good idea, "I'm going to put rocket boosters underneath it", Mr Cameron said.
But Harry Fletcher, assistant general secretary of the probation union Napo, said: "The coalition's policy of cuts, combined with payment by results, is undermining effective practice. Payment by results failed in Welfare To Work and will fail with justice. It will prove impossible to measure or monitor cause and effect in both prisons and the community."
But in a major speech in central London, designed to recapture the political agenda after weeks of difficulties for the Government, Mr Cameron stressed he never uttered the phrase "hug a hoodie" despite it becoming a defining motif of his leadership.
Serious crimes must be met with long prison sentences, he added, saying: "Retribution is not a dirty word. It is important to society that revulsion against crime is properly recognised." But he insisted he was not trying to "outbid any other politician on toughness". "It's not a case of 'prison works' or 'prison doesn't work' - we need to make prison work," Mr Cameron said.
Shadow justice secretary Sadiq Khan said: "There is nothing intelligent or tough about cutting frontline police officers, reducing the power of judges to give tough sentences or cutting support for innocent victims of crime. This is nothing more than a smokescreen to try and cover up Andrew Mitchell losing his job on Friday and 29 wasted months of dithering on law and order."