Companies should be fined for failing to follow rules aimed at cutting sales of unhealthy food to tackle the “public health emergency” posed by obesity, peers have said.

Businesses would be required to report on their progress towards targets for the reduction of sugar and salt and face penalties for non-compliance under proposals by the Lords’ Food, Diet and Obesity Committee.

The cross-party group is also calling for a blanket ban on junk food advertising and a higher sugar tax.

In a new report, the committee urged the Government to make a “decisive shift” away from policies based on individual responsibility and towards “bold” measures including increased levies and stronger regulation.

Among its recommendations is an uprating of the soft drinks industry levy (SDIL), which came into effect in 2018, to keep pace with consumer price inflation.

The Government should also lower thresholds for the tax from 5g and 8g per 100ml to 4g and 7g per 100ml and bring sugary milk-based drinks into scope by April 2026, the committee said.

As well as hiking the existing levy, the group called for a new salt and sugar reformulation tax regulation to target products not covered by the SDIL, which it said ministers should announce “as soon as possible”.

It welcomed the Labour administration’s commitment to a ban on junk food advertising online and on TV before the 9pm watershed but argued it should go further.

“There needs to be a total ban across all media by the end of this parliament on advertising both of HFSS (high in fat, salt or sugar) food and drink and by businesses that fail to reach healthy sales targets,” the report said.

Ministers should legislate “as soon as possible to make targets with dates for reduction of salt, sugar and calories mandatory for large businesses and require those businesses to report on progress”, it added.

“Fines for failure to comply should be introduced by the end of the parliament.”

The Government should bring in laws to make reporting on the healthiness of food sales mandatory for companies with more than 250 employees to ensure large businesses are “held accountable” for selling junk food, the group said.

Targets for healthier food sales should be introduced and progress reviewed by the end of this parliament with “penalties for non-compliance if progress is insufficient”, the report added.

The committee said that for too long there had been “a continued focus on failed policies founded on individual responsibility and voluntary regulation arising from an unjustified fear of the so-called ‘nanny state’”.

Britain is facing an “epidemic” of unhealthy eating and diet-related disease that requires radical action, it warned.

“Obesity and diet-related disease are a public health emergency,” the report said.

“Turning the tide and ending this emergency is a huge challenge, but it is not insuperable. Decisive action cannot be delayed any longer; we must seize the opportunity now to build a food system that enables us all to live healthy lives, protects the NHS and better ensure the nation’s prosperity.”

Health experts welcomed the recommendations but predicted resistance from the food industry and warned that changes would need to be “immediate, specific and measurable”.

“Although welcomed, approaches for food reformulation and banning advertising may be challenging given the conflict between food businesses’ need for profit over improving population health,” said Dr Aisling Daly, lecturer in nutrition at Oxford Brookes University.

Dr Nerys Astbury, associate professor in diet and obesity at the Nuffield Department of Primary Health Care Sciences at the University of Oxford, said: “What is needed are immediate, specific and measurable actions which have the potential to reduce obesity and diet-related disease rates which contribute to ill health and have significant impact on the wider economy.”

The Food and Drink Federation insisted the UK industry “takes the issue of obesity and poor diets really seriously” and called for “regulatory certainty” in order for progress to be made.

Chief executive Karen Betts said: “Manufacturers have already made significant progress to create healthier options for shoppers, based on government guidelines and the HFSS regulations. UK shopping baskets now contain far fewer calories and less salt and sugar than they did in the past. To continue with this, what industry needs is regulatory certainty.

“We also find encouraging the report’s conclusion that we need better quality evidence on ‘ultra-processed’ foods and whether processing itself raises particular concerns. If that research brought anything to light, industry would of course act quickly.”

A Department of Health spokesman said: “Our widening waistlines are costing the NHS and the economy billions of pounds.

“This Government is committed to urgently tackling this issue head on, shifting our focus from treatment to prevention as part of our 10-Year Health Plan, to ease the strain on our NHS and help people to live well for longer.

“That’s why we are restricting junk food advertising on TV and online, limiting school children’s access to fast food, and banning the sale of energy drinks to under-16s.”