John Reid, the home secretary, must live within his budget, Stephen Timms, the chief secretary to the Treasury, said yesterday as the chief inspector of prisons claimed lack of both cash and long-term planning had fuelled the crisis in Britain's jails.

Mr Timms' warning came as Anne Owers piled pressure on Mr Reid by declaring: "It is normally considered good practice to build an ark before the flood, rather than during or after it." Publishing her annual report on prison inspection, she added: "This means long-term planning, and planning which should have been done a long time ago. We need more money in the system generally - in mental health, in education and community support."