Hundreds of thousands of pounds of recycling credits will no longer be paid to the district and borough councils in West Sussex.
Since 2006, the county has handed over the money to help the councils increase the amount of rubbish they send for recycling rather than to landfill.
A meeting of the cabinet was told that, even though more than £40m had changed hands since then, there had not been ‘any significant improvement in performance’.
Deborah Urquhart, cabinet member for environment, said: “We have been sharing the money on the understanding that it would be used on projects to increase the recycling rate.
“But, after eight years and £40m, the rate has stalled. The incentive is not working.”
A report to the committee showed there had been an increase in the amount of waste sent for recycling over the past two years.
Mrs Urquhart, though, said this was down to the recycling of street sweepings, which was paid for by the county, and the alternate weekly collections introduced by Horsham and Adur & Worthing councils.
She said those councils had made ‘considerable savings on their collection costs by doing so’.
Cutting the recycling credits would save the county council £4.1m.
The meeting was told that £2m would be put into a reserve to support recycling projects from the other councils, such as food waste collections.
The amounts paid each year to the various councils range from £400,000 for Crawley to £800,000 for Mid Sussex and Adur & Worthing.
Claims that they had been using the money to prop up their general budgets have been strenuously denied in the past.
In a report to the cabinet, the councils warned of the consequences of removing the credits.
A spokesman for Arun District Council said areas such as dog waste collection, the Waste Busters education programme and the use of recycling officers would bear the brunt of the loss.
They added: “Given that West Sussex County Council contend that the payments are intended to promote recycling, not to prop up council budgets, the reduction seems short sighted at a time when we all accept that increasing recycling rates across West Sussex is a priority.”
Chichester District Council warned that new projects such as textile recycling would stop and work to make sure recycling bins were not contaminated with general rubbish – meaning they had to go to landfill – would be reduced.
A spokesman said Chichester would ‘cease the separate collection of dog waste and promote the use of normal litter bins for dog waste’, adding that the service cost £42,000.
The recycling credits will be stopped from April 1.