Ministers had long promised to move justice away from incarceration and increase the use of community sentences such as community payback orders, drug programmes or electronic monitoring.
However, a report from Audit Scotland has now found community sentences have stagnated over the past three years, with the country having one of the highest incarceration rates in Western Europe.
Five per cent of sentences handed down by courts – excluding fines – in 2016/17 were community sentences, dropping to 56 per cent the following year before returning to 59 per cent in 2019/20.
Scottish Labour’s justice spokesperson Pauline McNeill said “This report should be a wake-up call for the Scottish Government and all those committed to improving our justice system.
“It has been five years since the Parliament agreed this important law, but it seems the SNP have made no progress towards making it a reality.
“Many of our prisons are extremely overcrowded, made worse by the high levels of people held on remand in Scotland. Community justice, particularly for those who have not been convicted of a violent crime, must become more widely used.
"Evidence suggests that community justice sentences are effective at reducing reoffending as well as being less costly to the taxpayer.
“We need a real strategy to deliver on the ambitions of this crucial legislation and make the long overdue move towards community justice that we need to see.”
Stephen Boyle, the Auditor General, said: “Reducing reoffending by shifting the balance of sentencing from prison to the community has the potential to reduce the costs to the individual, taxpayer and wider society.
“But that Scottish Government aim hasn’t yet been achieved.”
Scottish Government analysis found in 2016/17 the cost of housing a prisoner in Scotland was on average £37,344 compared to just £1,894 for community sentences.
A Scottish Government spokesperson insisted it would be carrying out further work into next year.
They said: “While sentencing decisions in individual cases are a matter for the independent courts, we are committed to encouraging more widespread use of community-based interventions where appropriate.
"These are often more effective at reducing re-offending, as Audit Scotland sets out and for keeping our communities safe.”
“In addition to continued investment in community justice services, which will total more than £117m this year, Parliament agreed in 2019 to extend the presumption against short custodial sentences from three to 12 months.
"Although it is too early to determine the impact of the extension, the use of such sentences has fallen significantly in recent years, with those receiving a sentence of 12 months or less reducing by 13 per cent in the most recent data between 2018/19 and 2019/20.
“Our firm focus on prevention and effective community interventions has helped see Scotland’s reconviction rate fall to its lowest level since comparable records began more than 20 years ago.
"We intend to continue building on progress to date, including through a review of the National Strategy for Community Justice and expanding availability of alternatives to custody."