Recently I’ve been thinking about some radical changes we could make to UK law and politics. Now thought No 2. – this one my sounding board has generally been more accepting of, and it is that all financial penalties, handed out in law, should be index based (increase each year with inflation) and be declared as a percentage of disposable income, rather than a fixed GBP figure.
Fixing Fines (So They Stay Fair Over Time)
This has already been implemented in other countries and, to me, evens the playing field between rich and poor.
Another long-standing problem with UK law is penalties.
A fine set in 1990 is worth far less today thanks to inflation, meaning punishments get weaker every single year.
Several European countries solved this with day-fine systems, where fines scale with income. That way a speeding fine “stings” equally whether you earn £20,000 or £20 million.
Examples include:
- Finland – massive fines for wealthy offenders (some over €100k).
- Switzerland – once issued a record €1.1 million speeding fine.
- Sweden – income-based fines since 1931.
- Germany, France, Denmark, Estonia, Portugal, Austria and others.
The principle is simple and fair:
Punishment should have equal impact on everyone, not just the poor.
New Zealand has even debated adopting this, sparking useful discussions like this one:
https://www.eur.nl/en/news/should-rich-people-pay-higher-price-traffic-violations
Several types of UK fines have been described as almost meaningless, either because the amount is insignificant relative to the offender’s size or because collection is difficult.
Key examples include:
- Water Company Pollution Fines Fines for environmental breaches by large water and sewerage companies are often a tiny fraction of their multi-billion pound revenues. For example, Thames Water was fined £3.34 million for a “reckless” pollution incident, yet the following year saw a significant increase in their serious pollution incidents. Critics argue that for these companies, paying the fines is cheaper than investing in necessary infrastructure upgrades to prevent pollution, making the penalties an ineffective deterrent. The government has recently moved to implement unlimited financial penalties for environmental offences to address this issue.
- Unpaid ULEZ Fines Transport for London (TfL) is owed an estimated £370 million in unpaid Ultra Low Emission Zone (ULEZ) fines, many of which are from vehicles registered outside of Greater London or the UK. Collecting these fines is difficult and expensive, particularly from vehicles registered in other countries, making the penalties largely uncollectable and therefore meaningless in these specific cases.
- HMRC Late Filing Penalties for Low Earners A report highlighted that between 2018 and 2020, almost 400,000 people earning below the tax-free personal allowance (around £12,000-£13,000 at the time) received a penalty for not filing a tax return on time, even though they had no tax to pay. The standard £100 penalty, and potentially much larger cumulative fines, represented a disproportionate amount of income for these individuals, effectively penalising the poor rather than encouraging compliance in a meaningful way.
- Financial Conduct Authority (FCA) Fines (relative to bank profits) While some FCA fines are substantial (e.g., Barclays was fined £42 million for poor handling of financial crime risks, and Santander £107.7 million for repeated anti-money laundering failures), they can be viewed as insignificant compared to the overall profits and revenues of major global banks. Some banks even receive a 30% discount for settling early, leading some to argue the fines are an acceptable cost of doing business rather than a deterrent for systemic failures.
Would it actually helps the legal system?
My reason for looking at this is two-fold,
1- to see if it has a positive effect on the legal system?
2- if we can help use it to raise some funds for the government?
Lets see what evidence exists of how it works where it has been tried or implemented.
Is there any Evidence that proportional fines have a positive impact on the Courts.?
So believe it or not the answer is Yes, and it comes from of all places the USA.
In the Late 1980’s New York carried out the Staten Island Day Fines Experiment.
From the official evaluation – https://finesandfeesjusticecenter.org/articles/the-staten-island-day-fine-project/ – the Key results were:-
- Collection stayed high: the court’s already-high collection rate was maintained after switching to income-linked day fines.
- Average fines went up:
- Average fine amount rose by about 25%.
- The total amount of fines imposed increased by 14% in the pilot year.
- Non-payment collapsed:
- Under the old system, 22% of cases resulted in no payment.
- Under day fines, that fell to just 6%.
- Less enforcement hassle:
- The number of arrest warrants for failing to appear at post-sentence payment hearings was “significantly reduced”.
So: when fines were linked to what people could realistically pay (and this included higher penalties for the better-off offenders), the court both raised more money and had fewer non-payers and enforcement issues.
From the information, the actual offending rates did not dramatically change – but the cost of collection and enforcement declined.
A wider NIJ review of day-fine projects found that systems that:
- set fines relative to means, and
- used realistic payment schedules and graduated enforcement
tended to have good collection rates without resorting to prison for non-payment.
Germany’s shift in the late 1960s–early 1970s to day-fines (as part of a broader sentencing reform) is also informative: vera-institute.files.svdcdn.com
- The share of sentences that were fines increased from 63% to 84%.
- Short prison terms (under 6 months) dropped dramatically, and researchers note that default (non-payment) was kept at “acceptably low” levels under the day-fine system.
If you couldn’t collect from poor people, this kind of mass switch from prison to fines simply wouldn’t have survived politically.
How about evidence on the impact of Law-Breaking and reoffending?
Lets see what we can find –
Germany – fines vs short prison terms
The Staten Island report included a summary of work by Hans-Jörg Albrecht at the Max Planck Institute, comparing reoffending of German offenders sentenced to day-fines vs short prison terms: vera-institute.files.svdcdn.com
- For first-time offenders over a five-year follow-up:
- 16% of those given fines reoffended,
- compared with 50% of those given short prison sentences.
Once you take offence type, prior record etc., into consideration, fines (within a day-fine system) show a clear advantage over both probation and jail for property crimes like theft and fraud.
That’s not “ability-to-pay vs flat fine” in isolation – it’s “means-tested fines vs custody” – but it does support the idea that a properly structured fine system can deter without, the “university of crime” effects of prison.
Finland – modern quasi-experimental evidence
Some economists recently looked directly at income-based speeding fines in Finland. SSRN+1
Findings:
- When the income-based rule makes a speeding ticket about €200 larger, reoffending (another speeding offence) falls by roughly 15% over the next six months.
- After about 12 months, the effect fades – so it’s a strong short-run “wake-up call”, not a permanent behavioural change.
- The deterrent effect is stronger for higher-income drivers who face noticeably bigger fines in euro terms.
So there is solid evidence that when the fine is meaningfully painful (because it scales with income), some people do break the rules less, at least for a while.
Higher fines and recidivism more broadly
Other work (not always means-tested, but relevant) finds:
- A Dutch study reviewing a 20% increase in speed-fines found a reduction in reoffending and speeding among “light” offenders, though not among heavier, more persistent offenders. thesis.eur.nl
- On the flip side, US studies of court fines/fees systems where amounts are high but not linked to ability to pay show that raising fees can increase future felony reoffending and create a net social welfare loss – suggesting that unpayable financial penalties push some people toward more serious offending. Fines and Fees Justice Center+1
Put together: fines that are big enough to hurt but small enough to be payable are where you see the best deterrence; “fantasy” fines that people can’t pay just backfire.
Prompt payment vs Non payment
The big worry in practice is that setting fines as a % of income will be administratively heavy and might actually harm payment rates. The evidence is mixed but instructive:
- Staten Island: as above, non-payment cases fell from 22% to 6%, and arrest warrants for non-appearance dropped. Fines and Fees Justice Center
- Germany & Scandinavia: the long-run persistence of day-fines with low default rates is taken in the comparative literature as evidence that tying fines to means makes them enforceable at scale. vera-institute.files.svdcdn.com+1
Recent UK research on fines more generally stresses that unaffordable flat fines on people in deep poverty can increase reoffending, as people commit further offences to cover debts or disengage altogether – which is basically the opposite of what you want. justiceinnovation.org+1
So what can we actually say?
Some headline conclusions we can safely lean on, they’re roughly:
- Yes, means-tested/day-fine systems can improve payment and enforcement.
- The Staten Island pilot is the clearest: non-payment cases cut from 22% to 6%, total fine revenue up 14%, average fine up 25%, and fewer arrest warrants. Fines and Fees Justice Center
- There’s credible evidence of short-run deterrence, especially for better-off offenders.
- In Finland, income-based speeding fines that are ~€200 higher cut reoffending by ~15% over the next six months, with a stronger effect for high-income drivers. SSRN+1
- German day-fine systems show much lower recidivism vs short prison terms for similar offenders. vera-institute.files.svdcdn.com
- Fines that ignore ability to pay often backfire.
- Where systems pile on large, unpayable court debts, studies show higher serious reoffending and worse financial outcomes, plus not much net revenue. Fines and Fees Justice Center+1
- The design details matter.
- You need reasonably reliable income data.
And the surprise (to me) ending of this section.
We have actually already run a pilot of this in the UK – England & Wales unit-fine pilot (early 1990s)– yep – do you remember it? I don’t? So why wasn’t it rolled out?
Well to put it simply – The Rich (those receiving larger fines) made a big noise about it in the press and turned it into a Political Hot Potato, it was dropped.
It is worth stating that reviews of it noted that the system offered a more standardised and theoretically fairer approach – the problem was more political optics and income-data quality than non-payment or chaos in the courts. justiceinnovation.org+1.
Lets put some Figures around this
So my mother keeps complaining that everything comes down to cost these days. I wish I could say it didn’t but actually for a lot of those in power it does, and they make those without power believe it matters. So lets see what this COSTS.
Now this won’t be in my normal chatty style as its fairly unsexy and bland.
What If UK Fines Had Kept Pace With Inflation?
A Rough National Estimate
Most UK fines — especially small penalties — were set long ago and never updated.
Some examples:
- The standard HMRC late filing penalty: £100 (set in 1980s)
- Many magistrate fines: £50–£500, often unchanged for 20–40 years
- Local authority penalties (parking, noise, waste): typically set 15–25 years ago
- Minor regulatory fines (licensing, environmental): unchanged for 10–30 years
Over the last 30–40 years, UK inflation has roughly tripled prices (CPI ~2.8× since 1990).
Over the last 50 years, it has quadrupled (CPI ~4× since 1975).
So a fine set at:
- £100 in 1990 should be ~£280 today
- £100 in 1980 should be ~£420 today
- £50 in 1990 should be ~£140 today
- £100 in 1975 should be ~£400 today
Let’s apply this logic across the UK’s main small-fine systems.
HMRC Late Filing Penalties
Current fixed penalty = £100
Introduced 1989 → inflation multiplier ≈ 2.75×
If uprated annually:
- Penalty today = ~£275
HMRC issues ~700,000 – 1,000,000 late filing penalties each year.
But to stay conservative:
Use 700,000 penalties/year.
Extra revenue if inflation applied:
£275 – £100 = £175 extra per fine
£175 × 700,000 =
👉 £122.5 million additional revenue per year
Magistrates’ Court Fines (Common Small Penalties)
Typical fines:
- £50
- £100
- £200
- £500
Most were last updated in early 1990s → 2.7× inflation multiplier.
Magistrates’ courts issue ~1.2 million fines per year, value ~£300–350 million.
If fines had risen in line with inflation:
Nominal value today should be ~£810–945 million instead of ~£325 million.
Estimated additional revenue:
👉 £450–600 million per year
(after adjusting for ability to pay & collection rates)
Conservative midpoint: £500 million/year
Local Authority Parking & Minor Traffic Penalties
Original levels:
- £40–£80 in many councils 2000–2005
- Should now be £70–£140
Across the UK:
- ~7 million PCNs issued per year
- Average paid fine ~£50
If fines had risen with inflation:
- Average paid fine would be ~£80
Additional revenue:
£30 × 7,000,000 =
👉 £210 million per year
Local Regulatory Fines (Noise, Food Hygiene, Waste, Licensing)
These are often:
- £50
- £100
- £200
- £500
Most unchanged since the 1990s.
Regulators issue ~300,000–500,000 penalties per year.
Assuming a £100 fine should now be ~£275:
Additional revenue estimate:
Average uplift ≈ £120 per fine
Using 400,000 fines:
£120 × 400,000 =
👉 £48 million per year
Round conservatively: £40–60 million
Combined Estimate: Extra Revenue If Small Fines Had Kept Pace With Inflation
| Category | Annual Extra Revenue (Low) | Annual Extra Revenue (High) |
|---|---|---|
| HMRC late filing penalties | £120m | £140m |
| Magistrates’ court fines | £450m | £600m |
| Parking & traffic penalties | £200m | £240m |
| Local regulatory fines | £40m | £60m |
Total additional annual revenue:
👉 £810 million – £1.04 billion per year
Conservative midpoint:
≈ £900 million per year lost because fines never rose with inflation.
If the UK had simply indexed small fines to inflation, we’d be raising an extra £800 million to £1 billion every single year.
That’s roughly £30–£35 per household, without inventing any new offences or increasing maximum penalties – just stopping fines from quietly shrinking in real terms.
I hear you say – hold on what about linking fines to earnings?
Ok this gets a bit harder.. but lets give it a go.
International experience is pretty clear on this point: when countries switch to income-based fines, they usually end up collecting 25–60% more in real terms. If we applied that to the UK’s current £1.6 billion in small and mid-sized fines, we’d be looking at an extra £400–£960 million a year, with a sensible midpoint of around £650 million.
And the beauty of this is that it doesn’t require inventing new offences or cranking up the maximum penalties. It simply means the rich actually feel the fine, and the poorest aren’t hit with penalties they can never realistically pay. On average, it works out at roughly £23 per household — money that at the moment we’re effectively choosing not to collect.
If the UK moved to income based fines it could be raising an extra £400 million to £960 million every single year.
That’s roughly £23 per household, without inventing any new offences just by ensuring that all offenders share the pain.
“Zombie Fines”: the part we rarely talk about.
Every year, the UK carries hundreds of millions of pounds in outstanding, unpaid fines — a rolling stock of money that technically exists but never gets paid. Depending on the year, the backlog typically sits around £600–£800 million once you strip out cancelled or administratively voided cases.
The evidence from income-linked systems shows non-payment drops by more than half, but let’s be cautious and assume only a 30% reduction in unpaid fines. That alone would mean an extra £180–£240 million actually collected each year — money currently written off, chased endlessly, or left to rot.
And there’s a second dividend: we stop wasting money chasing debt that people were never realistically going to pay. Enforcement activity, court actions, bailiffs, admin staff, correspondence — it all costs. If non-payment falls by the same conservative 30%, the justice system saves roughly £60–£90 million annually in enforcement and administrative overheads.
Fines → Fairness → Trust → Democracy
And here’s the real point — the bit we always dance around in Britain because it makes the comfortable slightly uncomfortable.
A justice system that fines people based on what they earn doesn’t just raise a bit more money or tidy up the courts.
It sends a message about whose behaviour actually matters.
Right now, our system delivers two completely different experiences:
- If you’re broke, a £100 fine can wipe out your food budget for the week.
- If you’re wealthy, the same £100 fine is… what? The price of a slightly disappointing bottle of wine?
That isn’t justice.
It’s theatre.
And the thing about theatre is that eventually the audience stops believing the performance.
People see water companies treating fines as a business expense.
They see banks getting discounts for settling early.
They see hundreds of millions in unpaid penalties that the state never truly intended to collect.
And then we wonder why public trust collapses.
Fair fines — indexed to inflation and scaled to income — are not just about raising an extra £1.6–£2 billion a year (though that’s a very nice bonus).
They’re about making the rules feel real again.
When a penalty bites equally for everyone, something interesting happens:
- the law looks legitimate
- compliance goes up
- resentment goes down
- trust starts to rebuild, inch by inch
And at the end of the day, that’s what a democracy runs on.
Not slogans.
Not press releases.
Not “tough on crime” headlines.
Trust.
People believing that the system isn’t rigged.
That the rules apply to everyone, not just those without money or connections.
That breaking the law carries consequences no matter what’s in your bank account.
Fix the fines and you start fixing the legitimacy problem that has been hollowing Britain out for years.
A fair system that works, collects what it’s owed, and treats people like adults?
Honestly, that shouldn’t be radical.
It should be the default.
But here we are — and here’s a reform that would actually make things better.
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