Government provides details of £1.1 billion packaging EPR allocation for English councils
Extended producer responsibility payment methodology exposes dramatic cost variations between local authority types, with rural services noticeably more expensive than urban ones
English local authorities will receive £1.1 billion in the first year of the extended producer responsibility scheme, shifting packaging waste management costs from taxpayers.
The funding represents the first tranche of payments under EPR for packaging, which charges producers based on the materials they use rather than requiring councils to fund disposal through council tax. Businesses will pay £423 per tonne for plastic packaging, £266 per tonne for aluminium, and £196 per tonne for paper and card under the scheme launching in October.
Announcing the funding allocation to upgrade recycling infrastructure, Environment Minister Mary Creagh commented: "Under an outdated regime, the bill for disposing of items like milk bottles, cereal boxes and soup tins is currently footed by local councils with taxpayers paying."
The payment methodology developed by Defra provides unprecedented detail about recycling service costs across different local authority types. The Local Authority Packaging Cost and Performance Model categorises councils into ten groups for dry recycling collections, revealing how geographic and demographic factors influence efficiency.
Cost methodology reveals efficiency factors
The payment calculations demonstrate significant variations in service delivery costs across authority types. Average costs range from £108.04 per tonne for urban two-stream authorities to £276.92 per tonne for rural multi-stream services, with island authorities reaching £1,851.81 per tonne due to geographic isolation.
Urban authorities with high proportions of flats face specific challenges, averaging £201.88 per tonne for high-frequency commingled collections. Northern Irish rural authorities with higher deprivation average £293.76 per tonne, reflecting both geographic and socioeconomic factors affecting service delivery.
The analysis incorporates data from 50 local authorities to establish benchmarks, accounting for collection frequency, population density, dwelling accessibility, and deprivation levels. Volume constraints rather than weight predominantly drive dry recycling collection costs, with the model apportioning expenses based on material bulk density.
The data demonstrates considerable variation between collection approaches. Multi-stream services, where materials are collected separately, prove most expensive in rural settings at £276.92 per tonne, compared to £215.83 per tonne in urban areas. Two-stream systems, typically separating dry recyclables from residual waste, show more consistent performance across geographic contexts.
For residual waste management, the cost disparities are equally pronounced. Rural inaccessible authorities face costs of £390.10 per tonne, compared to £54.61 per tonne for urban authorities with high tonnage per household ratios.
Defra's methodology incorporates multiple factors including population density, dwelling accessibility, deprivation levels, and collection frequencies. The model uses data from 50 local authorities across the UK to establish cost benchmarks for similar authority types.
The analysis reveals that volume constraints, rather than weight, predominantly drive dry recycling collection costs. The model apportions costs based on material volume using bulk density figures, recognising that collection vehicles typically reach capacity limits before weight restrictions.
Material-specific cost variations emerge
Different packaging materials demonstrate varying cost profiles. Plastic film collections under the FlexCollect pilot programme receive additional funding recognition, whilst materials requiring separate collection streams incur higher per-tonne costs.
Gate fees for material recovery facilities average differently across nations, with separate calculations for England, Scotland, Wales and Northern Ireland reflecting regional infrastructure variations. The model accounts for both gross gate fees and material rebate values based on commodity prices from Lets Recycle data.
Executive Director of the Environmental Services Association Jacob Hayler said the scheme would "provide a rapid boost to England's stalled recycling rates". England's household recycling rate has plateaued at approximately 44 per cent since 2015.
The payment methodology excludes certain costs including tipping away payments, where county councils compensate district councils for excessive transport distances. Private Finance Initiative contract costs are incorporated where authorities responded to WRAP's gate fee survey.
From 2026, the system will introduce modulated fees penalising hard-to-recycle materials, potentially affecting local authority payment calculations. The Recyclability Assessment Methodology will categorise packaging as red, amber or green, with red materials incurring higher producer fees.
Cllr Adam Hug from the Local Government Association welcomed the cost shift to producers, noting councils operate "some of the best recycling services in the world" despite financial pressures. 
