Producer responsibility reforms are actively reshaping waste and recycling services, shifting costs, responsibility and influence upstream, but local authorities remain central to delivery.
Packaging EPR (pEPR) has fundamentally changed how household packaging waste is funded. Producers now pay the full net efficient cost of collecting, managing, recycling and disposing of household packaging. Local authorities receive this funding via PackUK payments, calculated using the Local Authority Cost and Performance (LAPCAP) model, which links funding to service costs and outcomes.
EPR for Packaging funding mandates standardisation of collections, via Simpler Recycling in England, and similar requirements in Wales, Scotland and Northern Ireland. In recent work for the Local Government Association (LGA) on the implications of rolling out plastic film collections by March 2027, Valpak’s modelling indicated that costs for local authorities will vary between £3 to £12 per household per year depending on recycling collection type and whether collection bags are provided or not.
While pEPR funding supports packaging streams, councils will still need to fund the collection and treatment of non-packaging materials. We estimate that 14% of flexible plastics in household waste streams is non-packaging plastics. This is made up of items such as purchased bags, which will be unfunded.
An Improvement Action Process (IAP), will require the poorest performing local authorities to deliver better recycling outcomes or risk deductions of up to 20% of pEPR payments.
The UK-wide Deposit Return Scheme for drinks containers is now confirmed to start in October 2027 with a deposit of 20p. PET plastic drinks bottles and steel and aluminium drinks cans will largely move out of kerbside collections and into a separate return network. For local authorities, this means reduced tonnages of high-quality material, lowering recycling income and impacting contracts. In a previous report for the LGA, we estimated that local authorities currently make an average net income of £2.69 per household from managing DRS materials, which make up 1.1 per cent of local authority household waste streams by weight and contribute 0.8 per cent to the recycling rate. Tonnages, income and contribution to recycling rate will drop by the DRS return rates, anticipated to be 70% in the first year and reaching 90% after three years. DRS materials remaining within the stream are not funded under EPR – although they do have high value if recycled.
Packaging Recovery Notes (PRNs) and Export Recovery Notes (PERNs) will continue to underpin reprocessing capacity by supporting UK reprocessors and addressing recycling gaps, particularly for harder-to-recycle materials. A consultation on PRN reforms is currently underway.
The Plastic Packaging Tax, charged on packaging with less than 30% recycled content, incentivises producers to use recycled material. For local authorities, this indirectly supports demand for household-collected plastics, but increases pressure on quality and consistency of material streams.
These topics will be discussed in Valpak’s upcoming webinar – Impact of Producer Legislation on Local Authorities – on 29th April.
