An influential group of MPs has been told by an independent consultant that local authorities should not be responsible for recycling.
Industry expert Chris Maltbaek told the Associate Parliamentary Sustainable Waste Group (APSWG) that funding would be better channelled if councils concentrated purely on residual waste.
The APSWG, which has more than 100 Parliamentary members, met at Westminster last week to discuss the way forward for private finance initiatives (PFI).
Maltbaek, director at consultancy firm Jacobs Babtie, told the MPs that changes needed to be made for PFIs to make an impact on the waste industry.
He said: Producers of packaging should be responsible for collection and treatment of their waste and they should do it separately from local authorities.
Lets get recycling out of PFI contracts. It is inappropriate that local authorities should have to pay for it. Producer responsibility should mean just that.
We would see a reduction in Council Tax and we could focus PFIs on diversion from landfill. We are wasting precious time chasing things that have been solved elsewhere.
PFIs see the Government grant large sums of money to back private investment from councils or companies in a defined project.
Nine waste PFI projects have been signed so far, eight more are in development and the total capital investment of these contracts is £1 billion.
Waste and Resources Action Programme chief executive Jennie Price told the APSWG: PFI is to be a key way of delivering the investment the waste industry needs.
National Audit Office comptroller and auditor general Sir John Bourn added: If anything fits PFIs, the waste-management sector ought to be it.
Partnership, communication and commitment are central to making PFI work, and contracts must allow for change.
But Maltbaek replied: Its all very well saying contracts should be flexible, but you try getting banks to lend you money for a project where the technology does not yet exist and the outputs are uncertain.