Given Ken Clarke's welcome realisation that prison does not, after all, work, I suppose it makes sense to to cut the funding to the prison service, though it would perhaps be wiser to wait until the cut in numbers has actually materialsed before cutting the staff.
However, if fewer offenders are to be sent to prison there will clearly be more on probation, performing community service or otherwise compensating for their crimes. This surely needs more qualified and experienced workers to supervise and guide them. So a cut in funds to the probation service makes no sense at all.
Although I am no expert I understand that there are rehabilitation programmes outside prison that are very effective, but they do cost money. Failing to provide it not only means that non-custodial sentences are ineffective (and held to ridicule by the tabloids) but unreformed miscreants cost more money in the future.
The coalition is rightly trying to curtail short term thinking in the City. Long term thinking in the prison and probation services would be equally welcome.