The chairman of the Environment Agency has called on local authorities to hold their nerve in spite of falling prices for recyclable materials and to go on investing in recycling. Lord Chris Smith said councils should take a long-term view and not abandon recycling services.

He told a meeting of the Aldersgate Group, a coalition of businesses and non-governmental groups, that councils should look for new domestic markets for products such as paper and plastics. He also wants local authorities to counter any fall in support for recycling among local people. Councils, meanwhile, have dismissed any suggestion that they are reducing recycling.

The economic downturn has led to dramatic falls in prices for materials collected by recycling schemes but Lord Smith said there could be no return to the days of too much rubbish being sent to landfill. “Local authorities in England and Wales must hold their nerve. The collection, treatment and reprocessing capacity for recyclable waste in England and Wales must be retained and expanded if we are to meet our legal targets on landfill waste,” he told the meeting.

He said the collapse in prices for materials for export pointed to a need for a more resilient domestic market. He quoted research from the waste reduction agency, Wrap, showing that although demand for lower-quality materials such as plastic trays, tubs and pots had dropped, there was still demand for higher quality items such as plastic bottles and glass. Lord Smith added, “It’s vital that this economic slowdown does not jeopardise public confidence in recycling, particularly with Christmas approaching, which is always a crunch time for waste collection and recycling.”

The Local Government Association has already called on people to keep recyling and Paul Bettison, who chairs its environment board, said councils were holding their nerve.”To imply that local authorities are cutting back on these services at the first sign of difficulty is both unhelpful and untrue,” he said.