Government Commits £1.1 Billion to Reinvent Local Recycling

In a move set to reshape how packaging waste is managed in England, local councils are due to receive a substantial £1.1 billion boost, funded not by taxpayers this time, but by the very companies responsible for creating the packaging in the first place.

This shift is part of a broader initiative under the new Extended Producer Responsibility (EPR) scheme, which officially rolls out this year. Historically, local authorities have shouldered the financial burden of recycling everyday packaging items, such as milk bottles, cereal boxes, and soup tins, using public funds. That changes now.

Starting in November, companies will be required to contribute fees based on the recyclability of their packaging. The more complicated a material is to recycle, the steeper the charge. The goal? To nudge businesses toward more sustainable choices—using less packaging overall, opting for recyclable materials, and investing in circular economy strategies.

The Department for Environment, Food and Rural Affairs (Defra) estimates that EPR fees will generate around £1.4 billion over the coming months. Of that, £1.1 billion is guaranteed for English councils in the 2025/26 financial year, while the remaining £300 million is earmarked for devolved UK governments to distribute across Scotland, Wales, and Northern Ireland.

Importantly, councils will have flexibility in how they deploy this funding. This might involve implementing more efficient household recycling collections, upgrading existing facilities, or constructing entirely new waste management infrastructure.

But there’s accountability built in, too. According to Environment Secretary Steve Reed, every penny must go toward enhancing packaging waste services. The scheme’s independent administrator, PackUK, holds the authority to claw back funds from councils that divert them elsewhere.

Zooming out, the government hopes this initiative sparks a ripple effect across the green economy, creating local jobs, boosting regional development, and driving up recycling rates, which have stagnated in recent years.

One example of the vision in action is Veolia’s Southwark facility, a hub where household waste is sorted, processed, and transformed into raw materials ready for reuse. It’s a glimpse into a future where waste becomes a resource, and responsibility finally aligns with impact.

Environment minister Mary Creagh said: “This Government is cleaning up Britain and ending the throwaway society.

She added that the money “will revolutionise how we deal with our waste and ensure more of today’s rubbish is recycled into tomorrow’s packaging”.

Local government minister Jim McMahon said: “Clean and tidy streets are something everyone wants to see, and these commonsense reforms will help councils achieve that.

“Whether it’s channelling more money into recycling or reforming the outdated funding system, we are fixing the foundations of local government so that it can focus on what matters most to people across the country.”

Jacob Hayler, executive director of the Environmental Services Association, said: “Our members stand ready to invest billions, alongside local authority partners, in the next generation of recycling services, infrastructure and jobs, which will provide a rapid boost to England’s stalled recycling rates.

“The new producer responsibility regime for packaging, alongside other measures to simplify recycling services, will unlock this investment and support our ambition to achieve a circular economy in the United Kingdom over the next decade.”

Jim Bligh, the Food and Drink Federation’s director of corporate affairs and packaging, said: “This announcement is welcome news for both industry and consumers, coming just before producers receive their first invoices for EPR.

“It marks a vital step towards delivering the improvements in the UK’s recycling system that we all want and need.”

Adam Hug, environment spokesperson for the Local Government Association, said: “It’s positive to see the costs of managing packaging waste shift to the industry creating this waste.

“Councils are proud to run some of the best recycling services in the world, with high levels of public satisfaction despite significant financial pressures.

“This success is built on council’s local knowledge and strong links with communities, and we hope the new scheme will support that work and help reduce the amount of packaging ending up in household bins.”