Local authority chief executives will soon be notified of the anticipated payments they will receive for managing packaging waste for 2025-26 as part of the extended producer responsibility (EPR) scheme for packaging. This scheme, with "polluter pays" at its heart, is intended to increase the quality and quantity of packaging material for recycling; over time, producers are expected to reduce the amount and complexity of packaging they place on the market.

The payments are expected to generate £1.1 billion in additional funds and give a welcome boost for Local Government finances. The autumn Budget confirmed that HM Treasury will guarantee the estimates for local authorities in England in 2025-26, with details to be set out in the Local Government Finance Settlement (LGFS) process.

While additional funding from packaging producers is welcomed, costs for managing waste are set to increase significantly with the proposed upcoming expansion of the emissions trading scheme (ETS) to include incineration. This could cost local authorities up to £750m when introduced in 2028, rising to beyond £1 billion by 2036.

At this critical juncture, whilst EPR funding offers a valuable lifeline, it is not a panacea for the broader challenges posed by rising waste management costs.

To succeed, councils will need proactively to reduce waste especially high carbon-based material streams, optimise recycling services, and plan for the financial impacts of policy changes like ETS expansion. Understanding the materials you manage is essential.

The changes outlined will undoubtedly pose challenges for local authorities, requiring bold steps, innovation and collaboration. It also presents an opportunity to reshape waste management and move towards a zero waste world.

Local Partnerships is a wholly owned public sector consultancy delivering value and efficacy to the public purse. We operate at the intersection between central and local government. Owned by HM Treasury, the LGA and Welsh Government, we are well placed to support you in navigating this landscape.

Please reach out to us at zerowaste@localpartnerships.gov.uk or Localpartnerships.gov.uk

Dr Debbie Fletcher is a strategy director at Local Partnerships