Hang 'em high Texas is not the first place you might look for lessons in criminal justice. The lone star state prides itself on

its toughness, with more executions and fewer bleeding hearts than

elsewhere in America, the most hardline state in a nation that locks

up more miscreants than anywhere else in the world. But it is the unlikely centre of a revolution in prison reform sweeping the US, overthrowing decades of failed polices and sterile debate driven by politicians scared of being seen as soft. The state has cut crime, costs and the numbers in jail to such an extent it has just shut a high-security prison for the first time in history.

What makes this prison revolt even more unexpected is that it is led by some of the most conservative figures in politics. They have decided – correctly – that an expensive prison system repeatedly locking up the same people is a sign of failure. As a result, they have endorsed policies traditionally seen as liberal to keep people out of jail.

The right in Britain should take note as our prison population hits record highs. Just as in this country, politicians in Texas were desperate to be seen as being tough on crime. There was reckless rhetoric and endless headline-grabbing legislation, including the ludicrous three-strikes law that led to life sentences for a third offence – even when that was stealing a slice of pizza.

Inevitably, prison populations and spending soared. The costs of incarceration rose fourfold in two decades. America now accounts for a quarter of all prisoners on the planet – and two-thirds of new inmates are recidivists.

Then Texas decided enough was enough. Four years ago, it was told to spend another $2bn on 17,332 new prison places. Instead, the state opted to invest in halfway houses to help those leaving prison and schemes to aid addicted and mentally ill offenders. Since then, taxpayers have saved a billion dollars, violent crime has fallen to its lowest level for three decades, and the right has seen the light on criminal justice. More than a dozen states have made similar moves, with some of the most doughty bastions of conservatism softening sentencing policies and shifting emphasis to treatment, training, early release and community-based punishments. A campaign called Right On Crime has been launched to promote the idea, supported by conservative standard-bearers such as Jeb Bush and Newt Gingrich.

The driving force was financial. But it makes perfect sense for the right. As the group's website says, turning law-breakers into law-abiding citizens should be a conservative priority because it advances public safety and the rule of law. The cause unites libertarians wanting to scale back the state, fiscal conservatives seeking to reduce spending, social conservatives concerned by family breakdown, and a religious right that believes in redemption.

Is it too much to hope for a similar outbreak of common sense in Britain? Among the biggest disappointments of the Blair and Brown governments was their pandering to the right on crime, with 28 criminal justice bills. The coalition has tried to adopt a more evidence-based approach, with an emphasis on rehabilitation and payment by results, but is wobbling in the face of fury on the backbenches and in the media.

Such is the hysteria that the sensible abandonment of cruel indeterminate sentencing had to be smuggled out last month under cover of tougher sentences for knife crimes. There was relief in Downing Street at the strategy's success – but they are still kicking around a keynote speech on crime by the prime minister already postponed for a year.

It is clear from several countries, notably Finland, that imprisonment has no impact on crime rates. Putting fewer people in prison means more money can be spent on more effective community-based punishments, which are often tougher than lying around stoned all day in prison. In the Netherlands this approach has been so successful prisons built in expectation of rising crime are being rented to Belgium.

Locking people up and throwing away the key is a costly failure. The alternatives are smart, not soft.

• This article was amended on 21 November 2011. An editing error led to the published version stating that Texas "locks up more miscreants than anywhere else in the world". This was supposed to be a reference to the United States itself and has now been corrected