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Secure colleges could be introduced to improve the education given to young offenders in England and Wales.

Most 15- to 17-year-olds in custody have been excluded from school, and half of those have the literacy skills expected of a seven to 11-year-old.

Around £245m a year is spent on the detention of about 1,800 young people.

Launching a consultation, Justice Secretary Chris Grayling, said: "We are spending too much money on very poor levels of outcomes."

Figures suggest 73% of young offenders who leave custody re-offend within a year, compared with 47% of adults leaving custody.

As part of a shake-up of youth custody, the government wants groups such as those behind free schools to get involved in providing teaching for young offenders.

Ministers say the cost of detaining young people is several times that of sending them to private school, but that the majority leave without the skills for life outside.

The green paper - Transforming Youth Custody: Putting Education at the Heart of Detention - looks at the free schools programme, as well as the academies programmes, as models to improve education standards for youth in custody.

In the 12 months to June 2012, 3,645 young offenders received a custodial sentence.

Youth offender institutions were contracted to deliver 15 hours of education per week, though this was frequently not achieved, the Ministry of Justice said.

Mr Grayling said the cost of youth detention was three times what it cost to send someone to a top private school.

He told 91Èȱ¬ Radio 5 live: "We have got to change the focus. We want education with detention rather than detention with some education."

Mr Grayling said: "We are spending £245m a year on detaining 1,600 young people and 70% of them are reoffending so we have not got it right yet.

"What I am saying to those organisations who have got skills in running schools for troubled young people from difficult backgrounds, people with experience in setting up academies, can you bring an additional skill to this task that means we can deliver better value and better outcomes and that's the purpose of this consultation," he added.

Emily Thomas, governor of Cookham Wood Prison in Kent, said: "Education absolutely is vital and having a conversation about what that education should look like and how much of it there should be is at the heart of the conversation we should be having.

"But I think we also need to be ensuring about how we manage very difficult behaviour from young people, how we help them to change that behaviour using offender behaviour programmes and I also think we need to be thinking about some of the external factors that lead to reoffending.

"What we do see from young people is an enthusiasm for education and a recognition from most young people that education is important and a real sense that they want to engage but that actually they find it difficult to engage, so their own behaviour lets them down."

Professionals from the education sector and custodial services are among those being consulted on the plans for youth custody.