Defra is considering increasing the recycling target to 60% as a condition of future funding for waste management facilities constructed under PFI (Private Finance Initiative).

This method of funding has proved popular with local authorities, 29 infrastructure projects have been approved so far and another 17 are currently going through the application process.

Projects usually involve a private waste contractor building and operating a waste treatment facility under a long term contract (25 years). Defra provides a local authority with the funds to pay the waste contractor on a performance basis over the life of the contract. Performance is based on how much waste is diverted from landfill.

Two such projects, recently announced by Defra, are in Leicestershire and South Wales. Defra is providing a combined £181.6m to fund the projects with the expectation that, in return, 98,000 and 293,000 tonnes of waste will be diverted from landfill in Leicestershire and South Wales respectively.

However, the long term nature of these contracts means that many existing projects are operating on more modest targets than those in Leicestershire and South Wales (which are around 50%). It is thought that Defra are disappointed with the performance of many current projects and are considering raising the target to 60% as a condition of funding for future projects.