British recycling policy is based on outdated assumptions about resources, which reinforce an expensive, stagnating system: recycling rates were up just 0.2 per cent between 2012 and 2013. In contrast, a circular approach, focused on preserving the value of collected materials, could enable the private sector to deliver £2 billion of investment in recovery infrastructure, capturing £1.7 billion in material and reuse value each year. We can’t ignore the poor outcomes that result from our existing recovery systems: less than half of our waste is recycled despite manufacturers’ demand for recycled materials, including amongst members of the Circular Economy Task Force. Much that is recycled is downcycled into less useful, lower value products. The result is that councils are spending more on waste management than housing or planning, while valuable raw materials are lost and businesses are left frustrated by a lack of usable recycled materials. The problem is structural. At a local level, decisions about recovery systems have been based on arbitrary political boundaries and made by councils not focused on material value. At a national level, a lack of central government strategy and common standards reinforce our wasteful system, rather than helping to resolve its inefficiencies. Pressures on council funding mean poor outcomes are likely to be entrenched, undermining existing recycling and new opportunities to reuse and remanufacture. Addressing this structural problem requires a shift in thinking: resource recovery should be based on preserving material value so that existing demand for high value recyclate and recovered parts can justify investment in reprocessing infrastructure. In practice, this means that collection and processing systems need to operate at a suitable scale to meet the needs of high quality reprocessors and remanufacturers. We show that for some materials, like biowaste, a single council area is the right scale for operations. Central government could increase investment by raising recycling targets or implementing landfill bans with separate biowaste collections. But for materials like plastics and waste electronics, collaboration across many local authorities, using materials from both municipal and commercial collections is needed to provide UK refurbishers and reprocessors with a secure supply of quality feedstock. Smarter and wealthier local authorities are beginning to collaborate, but most only do so to cut administrative costs rather than to improve the value of the materials recovered. Waste companies don’t have enough control over materials to create better systems, even where they can see the opportunities to do so. Central government has a choice in how it can help. It could empower bottom-up collaboration between entrepreneurial councils by creating a £250 million challenge fund for circular infrastructure. This is the same amount found by the Department for Communities and Local Government to encourage wasteful weekly residual bin collections. A fund would enable councils to design their systems together, so that sufficient high quality materials become available to justify private sector investment in recycling and remanufacturing facilities. These could include businesses like closed loop plastics factories; AD plants,which benefit from feedstock coordination; and waste electronics (WEEE) refurbishers. Alternatively, as part of its national infrastructure plans, the government could assess the infrastructure necessary to process materials like plastics and waste electronics at an economy-wide scale and set common collection standards for councils. Either approach would address the structural factors blocking a more circular economy for materials; support businesses which are demanding recycled materials; and capture more of the billions of wasted value lost in the current system.