Puny penalties are encouraging waste companies to break the law, according to a key Treasury advisor.
Philip Hampton was commissioned by Gordon Brown's office to review the work of regulators in the UK.
He found that low levels of fines handed out by magistrates meant it was often in a company's interest to pay the penalty, rather than spend time and money in complying with the law.
It concluded: "If penalties do not reflect the advantage gained by a company breaking the law, dishonest businesses are given further incentive to breach regulations and undercut honest companies."
Hampton's report, Reducing administrative burdens , also praised the Environment Agency as an example of best practice among regulators and suggested it be given an expanded role.
It also added further fuel to speculation that the Department for Trade and Industry (DTI) could be abolished after the general election.
It recommended the DTI lose its Companies Investigation Branch, which would be merged with the Insolvency Service Agency.