Cash incentives, composting and a campaign to wipe out the free, single-use plastic bag are at the heart of the Government's plan to wean England off its landfills according to a new strategy announced today.

David Miliband, the Environment Secretary, told the House of Commons that despite recent improvements, England was still disposing of far too much of its rubbish into landfills, which are already a prominent source of methane, a greenhouse gas, and are expected to be full within ten years.

He said that it was time for everyone — from individuals and small businesses to central Government — to change their behaviour and enact a series of new measures that would increase the amount of energy generated from waste and drive up the municipal recycling rate from 27 per cent to 50 per cent by 2020.

“Our key objectives are less waste, more re-use and recycling, more energy from waste and less landfill," he said, before announcing new landfill targets and a plan to cut the number of plastic bags by a third — equivalent to 3.25 billion bags — within 18 months.

The Government has been forced to tread warily in its attempts to improve Britain's rubbish throwing habits, with fears that draconian measures and new taxes will anger voters and encourage more fly-tipping, already a national nuisance that costs the Government around £100 million a year.

The decision by more than 100 local authorities to switch to fortnightly rubbish collection has already provoked a vigorous reaction, becoming a major issue at the local elections earlier this month, while Gordon Brown's to raise landfill taxes by £8 a year to 2010 has put a tight squeeze on councils and the construction industry.

In that sensitive climate, Mr Miliband said today that most of the initiatives aimed at reducing the amount of waste and improving its recycling would be voluntary.

The most controversial policy is to allow local authorities to offer financial incentives and, conversely, punishments to encourage recycling.

Announcing a public consultation to end a previous ban on financial incentives for councils, Mr Miliband sought to allay fears that local authorities would be able to fine those who throw out the most by insisting that such schemes would be "revenue neutral" and that any money raised would have to be plowed into better recycling facilities.

The aim, he said, was for local authorities "to reward in cash those who reduce waste and recycle at the expense of those who don't". He said that ultimate power over the schemes, which could result in discounts on council tax bills, would lie in the hands of local voters.

Nonetheless, fears of excessive monitoring of residents' rubbish throwing habits — in some cases with electronic chips in their bins — and charging them as a result has already prompted unease. Earlier today, Ben Bradshaw, the Environment Minister, told the BBC that such chips were only used to help local authorities keep track of their total waste rather than individual behaviour.

“The idea that there are spies in people’s bins that can tell people what is going into them is complete nonsense," he said.

Mr Miliband said that alongside the Government's target of reducing by half the amount of construction waste going into landfills by 2012, he was considering bringing England into line with several European countries by banning biodegradable waste and recyclables from landfill sites.

He added that by keeping kitchen waste out of landfills, there was an opportunity to increase the amount of energy generated by the anaerobic digestion of natural waste: rising from 10 per cent of municipal waste now to 25 per cent by 2020. He said that keeping waste out of landfills could prevent more than 9 million tonnes of CO2 reaching the atmosphere by 2020, the equivalent of 3 million cars driving for a year.

Despite its many initiatives, the Waste Strategy, the Government's first since 2000, was criticised by the opposition parties for not going far enough. Chris Huhne, the Liberal Democrats environment spokesman said that manufacturers who produce unnecessary packaging should be prosecuted rather than, as Mr Miliband suggested, made a partner in reducing waste.

"We need to work on every aspect of the problem: curbing excess packaging by introducing a right to return at retailers, prosecuting manufacturers using unnecessary packaging, and colour-coding recyclables so that householders know whether their council collects them,” he said.

“Councils must have the freedom to tailor waste collection to the needs of their area, including the ability to give discounts for good recycling. But there should be clear incentives on all authorities to recycle more by passing on the cost of the landfill tax."

Peter Ainsworth, the Tory environment spokesman, accused Mr Miliband of "vagueness and indecision" for his promises of more consultations and discussions — for instance the floating of an idea to let people opt out of junkmail — rather than firm policies.

“Instead of a clear, straightforward strategy to deal with the rising tide of waste, we have been offered yet more consultations, more dither," he said. “You have laboured and brought forth a mouse or possibly, as some doom merchants have argued, a rat."

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