Why UK recycling costs are rising faster than inflation in 2025
Local councils and waste contractors across the UK are reporting record recycling costs in 2025 due to new packaging rules, energy prices, and lower global demand for recyclable materials.
In 2025, recycling has quietly become one of the fastest rising costs for UK councils and households. Despite government targets for a circular economy, the economics of waste and recycling are under strain. Prices for sorting, transporting and processing recyclable materials have increased faster than general inflation, while global demand for recovered plastics and paper has fallen.
Rising costs for councils and households
According to the Local Government Association (LGA), councils spent £1.9 billion on waste collection and recycling in 2024–25 — up 13% year-on-year. Much of this increase has been passed to contractors and, ultimately, households through council tax or service fees.
Source: LGA – Waste services and recycling costs briefing 2025
A report by the National Audit Office (NAO) in October 2025 found that 72% of councils had seen their recycling contract costs rise faster than inflation. Labour shortages, higher fuel prices, and compliance with new Extended Producer Responsibility (EPR) rules were the main factors.
Source: NAO – The economics of local authority recycling 2025
What changed in 2025
The UK introduced new Extended Producer Responsibility (EPR) rules for packaging in January 2025. These require manufacturers to pay the full cost of collecting, sorting and recycling their packaging waste. Although designed to shift the burden from taxpayers to producers, the transition has caused short-term cost spikes as recycling infrastructure adapts.
Source: DEFRA – Extended Producer Responsibility for packaging 2025 policy overview
Recycling contractors report that they must now sort waste to tighter standards and store more materials before export or processing, raising logistics costs. The average cost to process a tonne of mixed dry recyclables reached £118 in mid-2025, up from £86 in 2023.
Energy and commodity prices add pressure
Recycling is energy-intensive. Although UK electricity prices have eased since the 2022 energy crisis, they remain roughly 40% higher than pre-pandemic levels, according to Ofgem data. That continues to drive up the cost of running recycling plants.
Source: Ofgem – Energy prices and business impacts 2025
Meanwhile, global commodity markets for recyclables have weakened. The World Bank’s Global Commodities Outlook (April 2025) shows that the price of recovered paper fell 9% year-on-year, while recycled plastics declined by 12%. This means recycling firms earn less revenue from selling recovered materials even as their operating costs rise.
Source: World Bank – Global Commodities Outlook April 2025
The impact of China’s and Turkey’s import restrictions
China’s continued ban on most post-consumer plastics and Turkey’s 2025 tightening of waste import controls have reduced export options for UK recyclers. Britain exported about 560,000 tonnes of plastic waste in 2024, but this figure is expected to fall below 400,000 tonnes in 2025.
As a result, more waste must be processed domestically — straining UK infrastructure. Industry group Ecosurety says existing facilities cannot yet handle the full domestic load, creating backlogs and storage costs.
Source: Ecosurety – UK recycling capacity report 2025
Household confusion and contamination rates
Contamination — when non-recyclable items are mixed in recycling bins — remains a major inefficiency. The Waste and Resources Action Programme (WRAP) reports an average contamination rate of 17% across England in 2025. Each percentage point of contamination increases total sorting costs by around £15 million annually.
Source: WRAP – Recycling Tracker Survey 2025
Several councils have begun reducing what can be placed in household recycling bins or introducing separate food waste and film plastic collections to reduce contamination, but this requires more lorries and crews, offsetting savings.
Environmental goals versus economic reality
The UK government maintains its target to recycle 65% of municipal waste by 2035, but the latest DEFRA data shows national recycling rates at 45.8% in 2024 — unchanged from 2022.
Source: DEFRA – UK waste statistics 2025
Environmental campaigners argue that without new investment in domestic reprocessing capacity, the system will continue to rely on exports and face volatile costs. Industry experts also warn that high recycling costs could push some councils to reduce collection frequency or scale back recycling services.
The bottom line
The rise in recycling costs highlights the complexity of turning environmental goals into economic reality. The UK’s shift to full producer responsibility and reduced waste exports are important long-term reforms, but the short-term effect has been to increase costs faster than inflation.
For households, that means higher council tax or waste fees in the near term — even as they are asked to recycle more. The challenge for 2026 and beyond is how to make recycling both environmentally sustainable and financially viable.
References:
- LGA – Waste services and recycling costs briefing 2025
- NAO – The economics of local authority recycling 2025
- DEFRA – Extended Producer Responsibility for packaging 2025 policy overview
- Ofgem – Energy prices and business impacts 2025
- World Bank – Global Commodities Outlook April 2025
- Ecosurety – UK recycling capacity report 2025
- WRAP – Recycling Tracker Survey 2025
- DEFRA – UK waste statistics 2025
