IMPROVED recycling rates will not save Oxfordshire from Government fines running into millions of pounds.

With no decision taken on what to do with waste left over after recycling, Oxfordshire County Council is bracing itself for two years of heavy fines.

The Government had warned there would be severe financial penalties for failing to significantly reduce waste sent to landfill sites.

But County Hall has still to make up its mind about the best alternative to burying waste.

Incineration and the other options being considered would all involve investment of about £100m.

Oxfordshire County Council is shortly to invite tenders from companies across Europe, and hopes to announce this summer which waste technology it will use.

It will, however, be too late to meet the tight Government deadlines being imposed on local councils.

Richard Dudding, the county council's director of environment and the economy, said: "We are in a position where, even though our recycling record is excellent, we can expect a period of fines. I would say we are looking at two years of fines. I would expect the fines to be in the low millions. We have put an extra £3m in our budget as a contingency measure. Many local authorities are going to find themselves in similar difficulties."

The Government waste penalties will begin to bite in 2010. One option is for the county council to buy landfill waste quota from another local authority, which does not have to bury most of its waste. This would be cheaper than meeting fines of up to £150 per tonne of waste sent to landfills in Oxfordshire.

The cost of exceeding Government landfill targets by 20,000 tonnes would be £3m, or £13 a year on the council tax of a Band D house.

The county council is already being hit by a major increase in landfill tax, that was included in budget last month.

It will increase the landfill tax from £21 a tonne at present to £32 in 2008/9, rising £40 in 2009.

This will add £1m to the county's waste bill.

Oxfordshire is hoping to introduce a giant food composting plant in the county, which would save thousands of tonnes of kitchen and garden waste going to landfill.

But Mr Dudding said that while food composting and fortnightly waste would help, more costly methods to dispose of waste would still be required.

He said the county was looking at burning rubbish in an incinerator to generate electricity.

Such a plant would cost £100m, and take up to four-and-a-half years to become operational.

Another option is advanced thermal treatment (ATT), a largely unproven method, which involves combustion through a process called gasification.

The third option is mechanical biological treatment, which means mechanically sorting waste to recover materials, then treating it biologically.

Andrew Wood, waste and recycling campaigner for Oxford Friends of the Earth, said County Hall was now years behind schedule in its search for a waste treatment solution. He said: "If it wanted to avoid fines, the council should have reached a decision three years ago."

The council is awaiting bids for a multi-million recycling centre, to take Oxfordshire's kitchen waste. The Chipping Norton-based recycling company Agrivert is proposing to build a £5m composter on land between Yarnton and Cassington.