Cut down on waste in the first place.
Do most of the sorting centrally with high-tech equipment.
Recycle the obvious stuff (eg metals) - do it on a commercial basis as far as possible without the involvement of councils. That is, the householder doesm't pay, the council doesn't pay, small recycling/collection firms make money to cover costs and a profit.
Burn most of the rest for electricity generation.
Dump the rest.
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