Town halls' efforts to force residents to recycle more of their rubbish are beginning to pay off big time.

Recycling rates have jumped from 7 per cent to 33 per cent in the past ten years, and the amount of waste sent to landfill is declining for the first time.

The idea was to pay less landfill tax and avoid hefty European Union penalties. Waste disposal is one of the biggest council expenses. Local authorities in England alone manage 30 million tonnes of waste every year at a cost of £3 billion, and the volume of waste is increasing by 3 per cent each year. The average cost of a treatment and disposal contract is well over £200 million, and collection contracts cost about £13 million.

The Exchequer already takes £32 per tonne of landfill waste. Next year this will rise to £40 per tonne and in 2010-11 it will go up to £48 per tonne. Councils estimate that they will have to pay about £1.5 billion to the Treasury over the next three years - £420 million this year, £480 million in 2009-10 and £540 million in 2010-11.

At the same time they are facing big penalties from the EU if they fail to meet strict targets to reduce landfill waste. By 2010 landfill has to be cut back to 75 per cent of 1995 levels; by 2013 it must be reduced to 50 per cent of 1995 levels; and by 2020 it has to be down to 35 per cent. From 2010 councils will be fined £150 for every tonne they send to landfill above the EU targets.

So in the past 18 months town halls have become ever more inventive about how to stop people throwing all their rubbish into black sacks and wheelie bins.

More than half of all local authorities now collect black bin waste only twice a month. On alternate weeks they collect recyclable goods such as paper, cardboard, glass, garden waste and, increasingly, plastic.

Data compiled by the Department for Environment, Food and Rural Affairs suggests that alternate weekly collections boost recycling. The top recyclers in the country almost all use this method. But the policy, or more often the threat of it being introduced locally, has produced protests about smelly bins, vermin and flies. Many council leaders do not dare adopt the policy for fear of being voted out of office.

Some town halls have tried to address the problems associated with alternate collections by fining residents who fail to close their bin lids properly or who put their rubbish out early — probably a step too far. Others, such as Brent, northwest London, have recently introduced mandatory recyling: residents who repeatedly fail to sort their rubbish are visited by town hall officials and in extreme cases fined.

But with the disclosure that householders are actually throwing out valuable commodities, perhaps a new scheme is needed. Town halls could encourage more recycling by pledging to reduce council tax or by earmarking profits for a new park or more frequent street-cleaning.

Householders might even be tempted to sell off their goods themselves. The only problem is that individuals or even streets would have to amass a vast amount of plastic over several months or years to make up even one tonne to sell at £230.

The answer is to scale up, with local councils combining with each other to take on the recycling companies and set up their own plants and trading centres. But only some will be able to do so. The rest will be ruing the day that they negotiated that 25-year contract with the local recycling company for £10 for a tonne of plastic bottles.

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