This is so simple, it really is. The only people who should be locked up are those who are persistently violent towards others. (I'd ideally include all animal species as "others" but I'll be realistic. One step at a time. Lets start with humans.)
So fraudsters, thieves, damagers of property, non-payers of taxes, blackmailers etc., either pay a fine or do community service, number of hours calculated to repay the financial cost of their crime.
And community service would be proper work, by the way. Also useful, possibly rewarding work. Eight hours a day working allotments for housebound pensioners. Renovating buildngs. Improving the environment generally. Supervised by hard but fair people with an old fashioned work ethic. (No, I'm not one of them, I'm a lazy sod.)
I was thinking of writing to Jacqui Smith about this but I doubt if she'd get to read it, or, if she did, she wouldn't do anything about it. I know, thats cynical, defeatist, but I think realistic. The law is basically about protection of property and power, not persons.
But yeah I'll write to her anyway.