Care for people with schizophrenia and psychosis is falling "catastrophically short", a report has found.
The Schizophrenia Commission said that there are "shameful" standards of care on some acute mental health wards, which can make patients worse rather than better. The Commission, established by the mental health charity Rethink Mental Illness, has called for a "radical" overhaul of the care system.
The report suggests that too much money is being spent on secure care - the most expensive form of care - and more should be invested in prevention and community support. It also expresses concern that early intervention treatment teams are being cut in some areas. Researchers claim that very few sufferers get the recommended levels of care.
The report states that there should be more widespread use of community-based "recovery houses" and a redirection of funding from secure units into early intervention services.
Professor Sir Robin Murray, chair of the commission, said: "We have spent the last year listening to expert professionals and more importantly, the experiences of people who have schizophrenia and psychosis and their families.
"The message that comes through loud and clear is that people are being badly let down by the system in every area of their lives. People with psychosis need to be given the hope that it is perfectly possible to live a fulfilling life after diagnosis. We have no doubt that this is achievable."
Paul Jenkins, chief executive of the charity Rethink Mental Illness, added: "It is a scandal that in 2012 people with schizophrenia are dying 15-20 years earlier than the general population and that only 7% are able to get a job. Too many people are falling through the gaps in the system and ending up in prison or homeless.
"Developing ideal treatments might take time, but there are things which can be done today which could transform lives. More money does need to be spent - but the funding that already exists could also be used much more effectively."
A Department of Health spokeswoman added: "This report highlights important areas for improvement and shows why we have put better treatment for those with mental health problems at the heart of the new Mandate for the NHS. This includes plans to hold the NHS to account for improving health and reducing premature deaths in people with serious mental illness.
"We're setting up pilot sites to improve access to psychological therapies for those who have a severe mental illness including schizophrenia. We are clear that people with mental health problems should be treated with the same high quality and dignified care as anyone else and we expect the NHS to make this happen."