The use of short sentences by the Youth Justice Board as a way of punishment has been criticised as being poor value for money during an evidence session with the Public Accounts Committee on 12 January 2011.
MPs heard from the Permanent Secretary at the Home Office Sir Suma Chakrabarti, and Helen Edwards and John Drew from the Youth Justice Board, based within the Ministry of Justice.
The committee focused on a report by the National Audit Office (NAO) that found that serious young offenders were as likely to re-offend now as they were in 2000.
The NAO says that youth crime cost the UK economy up to £11bn in 2009, despite a fall in crime figures.
Figures show that reoffending by young people given more serious community sentences has risen by 6% since 2000, while reoffending among those leaving custody has dropped by only 2%.
The NAO said that the youth justice system could cut its custody costs by 11% just by reducing the number of places in secure units that it was not using. Each youth custody place costs at least £50,000 a year.
Helen Edwards told MPs that it was difficult for judges to "retain credibility" if they didn't give custodial sentences to repeat young offenders.
However committee chair Margaret Hodge said the board could "save a lot of money and get better value if you stopped incarcerating people for short sentences".
As part of its proposed cut of quangos, the government has proposed that the Youth Justice Board be abolished.