A new national scheme aimed at increasing recycling rates and tackling litter could hit council income, officials have warned.

The Deposit Return Scheme (DRS) will be introduced in England in October 2027, following the success of similar initiatives in other countries.

DRS, which was first proposed by the government nearly a decade ago, will see consumers charged an extra 20p every time they buy a drink in a metal can or plastic bottle.

This deposit will then be refunded when the container is brought back to designated return points, including reverse vending machines.

The aim is to ensure that as many cans and bottles as possible are recycled, instead of being thrown in general waste or dropped as litter.

Scrutiny committee members at Newcastle-under-Lyme Borough Council were told that the authority will not be directly involved in DRS, which will be run nationally by the non-profit Exchange for Change.

But Andrew Bird, service director for sustainable environment, said the scheme could still have an impact on the council's services and finances.

At the moment, cans and plastic bottles are collected through the council's doorstep waste service and then sold to recycling companies, generating an income for the authority.

Mr Bird told the health, wellbeing and environment scrutiny committee that while the doorstep recycling service would continue, its income could fall.

He said: "The valuable items in our waste stream at the moment, aluminium being the key one, will effectively disappear, which will affect the income we receive.

"Council recycling rates will decline to about five per cent. There will be pressure on budgets due to the loss of income."

Mr Bird also suggested that DRS could lead to 'bin divers' ransacking waste bins for cans and bottles in order to claim back the deposits, which could result in more litter on the street.

DRS is well-established in many parts of Europe, with countries such as Slovenia seeing recycling rates rise as high as 78 per cent for cans.

But Mr Bird does not believes it will have the same impact in the UK, where doorstep recycling services are already working well.

According to the latest figures, the borough council currently has an overall recycling and composting rate of 52.8 per cent, slightly above its target for the year.

Mr Bird added: "I do seriously think this has not been a well thought through scheme at all. It's worked on the continent, but they don't have kerbside collection schemes in the same way as we do.

"There's a groundswell of local authorities and wider industry who are lobbying government to at least postpone it."

Committee members shared Mr Bird's negative view of the scheme.

Councillor Martyn Ashworth said: "I can't find any positives to this. It was probably needed around 10 years ago before kerbside collections became as good as they are now.

"We'd lose money, there'd be the cost of the machines – it's just another nutty idea that needs to go in the bin."

Councillor Pamela Jellyman suggested that people who are unable to return containers will end up paying more for their shopping.

She said: "They will include elderly people and those on restricted income. They'll be paying the money, but then they won't be getting it back. To me, it's not an equality project at all."

The committee was told that Exchange for Change would donate unredeemed deposits to charity, but Mr Bird said he did not know how this would work in practice.