​Michael Gove has pledged to crack down on illegal waste-dumping and fly-tipping by organised crime gangs costing Britain hundreds of millions of pounds each year.

The environment secretary announced a consultation on ways to bolster the fight against criminals who fly-tip or operate illegal waste sites, creating a nuisance for residents and local businesses, with offensive smells, fly infestations and fires.

Those involved also evade landfill tax, harm wildlife, export waste illegally and undercut reputable waste-disposal businesses, according to environment officials.

Fly-tipping is already punishable by a fine of up to £50,000 or 12 months’ jail if the case is heard by magistrates, but can attract an unlimited fine and up to five years’ imprisonment in a crown court.

Such activity is estimated to have cost the English economy more than £600m in 2015. In Northern Ireland, illegal waste dumping has cost taxpayers more than £500,000 over the past two years, figures this month showed.

In 2016-17 councils spent about £58m clearing away fly-tipped waste.

Mr Gove’s review will consider what else the Environment Agency, the environment department, local authorities, the private sector and police can do, and make recommendations on tackling organised waste crime, which particularly affects rural areas.

The secretary of state said: “Organised criminals running illegal waste dumps and fly-tipping are blighting local communities. They cost our economy vast amounts of money, pollute our environment and harm our wildlife.

“We must crack down on these criminals who have no regard for the impact they have on people’s lives. The time is right for us to look at how we can best tackle these antisocial and inexcusable crimes”.

The Environment Agency shut down more than 850 new illegal waste sites in 2016-17 – an average of at least two a day.

The Home Office believes criminals may also be operating illegal waste sites as a cover for theft, human trafficking, fraud, supplying drugs and firearms, and money-laundering.

Ben Wallace, the economic crime minister, said: “Organised crime groups exploit any opportunity to make money. Our local communities are being scarred by the illegal dumping of waste, while at the same time people are being conned into placing contracts with dodgy waste firms.”

Lizzie Noel, a non-executive director at the environment department, who will chair the review, said: “This is an opportunity to properly understand the extent of this criminal activity, and I look forward to working with a range of partners to ensure our response is robust and effective.”

New powers already given to the Environment Agency include locking gates of problem sites to prevent waste illegally building up. Landfill tax has been extended to cover material at illegal waste sites.

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Councils have also been given the power to hand out on-the-spot fines and made it easier for vehicles suspected of being used for fly-tipping to be stopped, searched and seized.