Sez report

Both carrots and sticks 
We want to make it easier for people to live greener lives. That’s why we suggest stamp duty rebates 
and council tax reductions for environmental improvements. We are not about hair shirts and 
punishment. We need to encourage the good whilst detering the bad. 
1.3.3.1.3. Regulation 
Where possible, we have sought to find market-based instruments, such as fiscal signals and trading 
mechanisms, to deliver sustainability improvements. However, sometimes this kind of market 
mechanism will not send a strong enough signal or simply cannot deal with things which are outside 
the market’s control. Regulation is the first resort of some politicians but Conservatives use it with 
reluctance. To borrow a construction from Mazzini: ‘Regulation, prima facie, demands an apology’.
Nevertheless, there are situations where proportionate and targeted regulation is necessary. Fiscal 
signals, or ‘putting a price’ on environmental resources, cannot easily work on occasions where the 
elasticity of demand does not support substitution by companies or individuals or where behaviour is 
not sufficiently rational to react quickly enough to price signals unless there were of such magnitude 
that they would be politically impossible to implement. Many of the dilemmas of transport are of this 
kind. 
In such circumstances, regulatory solutions are needed. Direct controls force polluting industries to 
improve their performance and can eliminate products or practices deemed particularly hazardous 

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from the market altogether. Such legislation parallels the banning of lead in toys. It delivers a known 
environmental outcome and constitutes a powerful way of making companies mitigate their 
environmental impacts through the threat of fines or other regulatory action.
There is rightly a demand for ‘better’ regulation. This involves monitoring the outcomes of regulation, 
and giving more flexibility over the process, reducing the time and cost burden of red tape, and 
targeting enforcement activities on those deemed to be at greatest risk of default. In drawing up policy 
recommendations, we have preferred the light touch, seeking market-based solutions to environmental 
problems wherever possible. In any case, we need to measure outcomes rather than processes, and to 
ensure that regulation is not repetitive or contradictory but proportionate and well-designed.