DANNY IS an ordinary prisoner. He started skipping school to get drunk at eight, entered a series of residential homes and secure schools at 13, and by 16 was locked in a young offenders institution.

Now 20, he has been jailed more than 15 times. His crime, in every case, was stealing drink. After spending Christmas at Polmont YOI, he has already been jailed twice this year.

After his next birthday, his likeliest prospect is mainstream prison, and with it the risk of drugs and more serious criminal behaviour.

In the sad and vivid phrase of last year's Scottish Prisons Commission, his is a life "lived in instalments", a seemingly endless cycle of short sentences, rapid re-offending and precious little liberty in between.

He is not alone. Around 90% of his fellow inmates in Polmont have been inside before, with seven convictions the average.

This week Danny was singled out in a lecture by Dr Andrew McLellan, her Majesty's Chief Inspector of Prisons in Scotland. If Danny and others like him can be kept out of prison through community sentences, fundamental reform is possible, McLellan argued.

Neither the system nor the people in it are lost causes, but the status quo won't save them - only radical change will do that, he said.

So how bad are things? According to the June report of the Prisons Commission, chaired by former first minister Henry McLeish, grim in the extreme.

It described a dangerously overcrowded system which fails to rehabilitate serious offenders, as low-risk and remand prisoners suck up staff time and resources.

Scotland already jails more of its people than almost any other European country. At 141 inmates per 100,00 of population, the rate is slightly behind England and Wales, Spain, and Luxembourg, but double that of Denmark, Italy and Norway, and it is rising.

Despite overall crime falling, the prison population has risen from below 6000 a decade ago to around 8000 today.

Last September, when it reached 8137 against a design capacity of 7300, the Scottish Prison Service admitted "very significant operational effort" was needed just to find space for all the prisoners being put into the system.

As for rehabilitation in such circumstances - forget it.

As the McLeish Commission report put it: "High prison populations do not reduce crime; they are more likely to create pressures that drive re-offending than to reduce it."

Yet it is not a wave of ruthless hard-cases driving the population skyward. The main drivers are remand prisoners, short sentences, and the "warehousing" of addicts and the mentally ill.

Instead of being a sanction of last resort, prison is increasingly handling the "noxious" in society, mopping up failures elsewhere in the education, social work and health systems.

The number of remand prisoners has grown by 70% in the last decade, and they now make up almost a quarter of the prison population.

In 2006 to 2007, more people were remanded in custody to await sentence or trial than were sent to jail for punishment - 23,181 compared to 20,403.

Around 80% of custodial sentences are for less than six months, with almost 60% for 90 days or less, although only half that term is actually served.

It's too short for meaningful education or training, far less addressing ingrained offending. The result is a revolving door which fails to address prisoners' behaviour, then sends them back to their communities, where half re-offend within two years.

"Short sentences achieve nothing for prisoners," says Derek Turner, assistant secretary of the Prison Officers Association in Scotland. "You're just taking them in and giving them bed and board."

However community sentencing, which is more effective in reducing re-offending than jail, is also far from problem-free.

Sheriffs who are reluctant to jail the vulnerable know council departments delivering alternatives are under-resourced and swamped in casework.

There is also a widespread public perception that community service is an easy ride for sniggering yobs.

So what can be done?

McLeish's report made 23 recommendations, the key ones being a cut in the prison population from 8000 to 5000, an end to sentences below six months, and a bigger, better community service system which the courts and public would trust.

The alternative, it said, was more of the same, then worse: more over-crowding, higher recidivism, and endlessly blighted communities.

The government responded with enthusiasm, but in the last nine months, the cheerleading spirit seems to have waned.

Despite Scotland facing a "now or never" decision on the penal system, McLellan fears the McLeish report is "in danger of being marginalised" as its implications sink in.

Political will and money are critical.

Last month, justice secretary Kenny MacAskill introduced his Criminal Justice and Licensing (Scotland) Bill to parliament.

On the face of it, it seems to do much of what the McLeish Commission wants. Its over-riding aim is a "coherent penal policy", and an end to decades of muddle.

Courts will use custodial sentences under six months only in exceptional circumstances, while a new, simplified "Community Payback Order" will replace the mish-mash of orders on probation, community service, community reparation and supervised attendance.

But the politics are not straightforward. The SNP is regularly pummelled in the press for promoting a "soft touch Scotland" with its plan to end short sentences, and though the Liberal Democrats are on-side, Labour and the Conservatives are not.

The bill faces a rough ride in coming months. MacAskill has a thick skin when it comes to the media, but the rest of the cabinet may get squeamish about letting more criminals roam free.

Then there is the cost issue.

According to the McLeish report, reducing the prison population by 500 would save between £15m and £20m a year, so getting it down to 5000 should save between £90m and £120m.

But initial savings would be offset, or even exceeded, by the cost of building modern prisons and expanding community services.

The best of these, such as Includem, which works with those who have exhausted the rest of the system, use intensive methods, with staff available 24/7 every day of the year.

If the prison system is to get a genuine fresh start, community alternatives have to be scaled up massively, and it won't be cheap.

The McLeish report doesn't soft soap it: "Though long-term savings would result from better targeting and limiting the use of imprisonment, the Government and the people of Scotland should be left in no doubt that we first need up-front investment in better services in and for Scotland's communities."

Boosting spending on criminals is a hard political sell even in good times. In the pit of a recession, it may be the ultimate test of MacAskill's mettle.

"The major problem is the money," says Keith Simpson, head of development and research at Sacro, the community safety charity.

"You have to get the new system in place before you can empty the institutions."

Turner agrees: "Unless there's an injection of cash in additional social services to look after prisoners in the community, it's all going to fall on its backside."

Part-time Sheriff Brian Donald, who oversaw one of Scotland's first drug courts, said the bench was loath to use short jail sentences. But he believes that if the new ideas are to work, more resources will be essential.

"I don't see the prospect of them succeeding unless Mr MacAskill and Mr Salmond have some massive source of financial support which we don't know about."

In Polmont YOI, Danny is making progress.

As the governor's "passman", or helper, he has a position of trust, regular contact with the public, and a growing self-respect. He also has a good attendance record at the YOI alcohol programme.

But outside there is nothing and no one to break his fall, and release invariably means a return to his drinking pals.

He is usually arrested within 72 hours. The longest he has managed to stay out is a month.

Right now, there is nothing to make the next time any different.