Rishi Sunak was warned by own watchdog three years ago that prisons would run out of space in 2023

The government's own watchdog warned three years ago that Britain's prisons would run out of space by 2023 as it accused the Treasury of failing to provide the vital cash needed to tackle the issue.

The National Audit Office raised the alarm in a report published in February 2020 – while Rishi Sunak was chancellor – saying that without intervention demand for prison places was on course to exceed supply sometime between October 2022 and June 2023.

The report pointed the finger at the Treasury for failing to provide enough funding to expand the prison estate, and said a need for more places was being driven by the government's own policy of imposing longer prison sentences.

The stark warnings come as the number of people jailed in England and Wales has hit an all-time high – with just 557 places left – and as ministers consider releasing inmates early and delay sentencing for rapists and burglars in a scramble to avoid running out of space.

Campaigners and prison officers said the NAO reports showed that the government had refused to listen to repeated warnings of a looming crisis.

The Prison Governors Association (PGA) this week told The Independent spaces were going to run out “without a shadow of a doubt” and that an early release scheme to free up space was now "inevitable".

It comes after reports that Lord Justice Edis, the most senior presiding judge in England and Wales, had ordered the sentencing of convicted criminals on bail to be delayed from Monday.

The NAO report, published in February 2020 while ministers focused on Brexit and the early stages of Covid-19 pandemic, warned: "The forecasts are highly uncertain but suggest that, without intervention beyond new places under construction, demand for prison places could exceed supply between October 2022 and June 2023."

The respected watchdog, which scrutinises government spending for public services, said the Treasury had allocated investment for prisons "well below the level needed" to meet demand for places, and that cash available was directed to addressing immediate safety issues such as fire safety, water hygiene and asbestos.

But the government had also made matters worse by repeatedly pausing and restarting different policy initiatives to expand prison capacity, the auditor said – including proposing and then withdrawing plans to use private finance to fund expansion.

"The funding model for new prisons changed four times between October 2016 and December 2018, which reduced public capital funding and delayed the programme," the report says.

"The continued uncertainty around how new prisons should be funded impacts on HMPPS’s ability to plan and start construction."

But wider government criminal justice policy is also driving the crisis. The NAO report said "plans to increase the minimum sentence length for the most serious offences... will likely place further pressure on prison capacity", and also said that a government policy of recruiting 20,000 more police officers is expected to increase demand for prison cells.

"The National Audit Office are on a long list of individuals giving warnings to this Government. It is a crisis of their own making yet no one takes responsibility," Steve Gillan, general secretary of the Prison Officers' Association (POA) told The Independent.

"The POA have been warning about policy decisions for many years. Sadly they have fallen on deaf ears. Between 2010 and the present day, prison closures have lost 10,000 places, with only 11,000 coming on stream with the new building program which is delayed and not on target."

Andrew Neilson, director of campaigns at the Howard League for Penal Reform, said the government should aim to reduce the prison population – which is now at record levels.

“Just today, the number of people in prison in England and Wales has hit the highest number ever recorded at 88,225," he said.

"It is well beyond time for urgent intervention. Rather than carrying on with ill-thought-out plans to increase the prison population by more than a fifth in the next four years, the government must act to reduce these numbers.

“Prisons create conflict, thwart human potential, put a strain on police and hospitals and cost a fortune. Instead of helping people to move on from crime, too often they do the opposite.

"The sensible way to protect the public is to ease pressure on a system that has been asked to do too much, with too little, for too long. Reducing the prison population would save lives, protect staff and help more people to move on from crime.”

An earlier NAO report into the issue, published in 2013, said that "reducing prisoner numbers, where possible, still represents the best way to save money in prisons in the medium and long term", noting that "every 1,000 places in the prison system cost, on average, £28 million a year".

Charlie Taylor, HM Chief Inspector of Prisons, said the prison population crisis has been "a long time in the making" and that more focus on rehabilitation was needed.

"We see a very high rate of reoffending, with a churn of men and women caught up in a cycle of offending that prison does nothing to break. Until we tackle the lack of meaningful purposeful activity in custody, this situation will not change," he said.

Labour’s Shadow Justice Secretary, Shabana Mahmood said the fiasco was "yet another Tory failure of their own making" and that the prison estate was "in crisis because they have failed to deliver the prison places they have been promising, despite endless warnings that failing to do so would have serious consequences."

"The government have continuously moved the goalposts on the delivery of prison places to the point where the public will be rightly concerned about the early release of dangerous criminals. People deserve a government that ensures safety and security in their communities.

But former justice secretary Robert Buckland told The Independent: "We worked hard on getting our prison places predictions right and pushed this issue ahead of the last spending review.

"Rishi and I worked to increase investment in prison building from 2019 but the current increase in remand prisoner numbers has more than offset a decline in the number of convicted prisoners – in other words, the court backlog mainly caused by covid has made the situation more difficult."

A Ministry of Justice spokesperson said the government would be setting out a reform programme "in the coming days", with Justice Minister Alex Chalk set to give a statement in the Commons on Monday.

“We are categorical that the most serious offenders should be sent to prison and that anyone deemed a risk to public safety is remanded in custody while awaiting trial. Reports to the contrary are false," they said.

“This government has done more than ever before to protect the public and keep sex offenders locked up for longer, ending automatic halfway release for rapists and serious violent offenders and sending rapists to prison for three years longer than in 2010."

The government blamed the pandemic and barristers' strike for "a significant spike" in the prison population and said it was "carrying out the biggest prison-building programme since the Victoria era".

The spokesperson added that the government had "taken decisive action to expand capacity further by doubling up cells in the short-term, the prison estate remains under pressure" and said the Lord Chancellor would be "setting out a programme of reform in the coming days".