I work for a manufacturer who supplies materials to the civil engineering industry and one of the industries we get involved in is the waste industry. We have many contacts in the waste industry from the EA/SEPA, engineers, operators and contractors so we are reasonably well informed.
The market for recycled products is next to nothing. This means that the majority of the waste which is recycled, actually ends up in landfill. However as the municipal waste stream goes from householder to transfer station to recycling plant to landfill, your local authority actually claims this waste has been recycled, even though it ends up in landfill.
I know of one landfill site operated by a major waste operator where the recycling plant is situated on the landfill site and the end product actually comes out of the facility on a conveyor belt, dumping it onto a landfill.
Considering landfill tax is about £80/tonne, its no wonder why your local authority doesnt tip direct to landfill, instead of tipping at a recycling facility, thus selling the green option although motivated by avoiding the steep landfill tax.