The recycling company Veolia has been accused of refusing to adapt a 30-year contract to allow Brighton and Hove council to collect more plastic waste as local authorities struggle to meet a national target of 50%.

Caroline Lucas, the Green party MP for Brighton Pavilion, said the company had refused requests to change the contract. As a result, attempts by the city to increase the collection of plastic waste had failed.

The UK has to meet an EU target of 50% recycling by 2020, but recycling rates across the country are collapsing.

The latest figures from English councils published this month show recycling rates have fallen by 0.3 percentage points to the end of March 2018, and stand at 44.8%.

The amount of all local authority waste sent for recycling fell in 2017-18 to 10.9m tonnes, a 3.5% decrease on the 11.3m tonnes in 2016-17. Rates among local authorities in England range from 14% to 64%.

Brighton and Hove has a recycling rate of 30%. The council is restricted to collecting plastic bottles from householders for recycling as a result of its contract with Veolia; many other UK councils collect trays and other plastic recyclate along with bottles.

Lucas said: “Brighton and Hove council have a 30-year PFI contract with Veolia. They are refusing to change the contract so that a wide range of plastics can be recycled. The council doesn’t have the £1m for the required machinery at the Veolia plant to enable a wide range of plastic to be recycled.”

Michael Gove, the environment secretary, has said the council could write to him about the issue after questioning by Lucas.

Simon Ellin, the chief executive of the Recycling Association, said the market for low-grade plastic, such as tubs and trays, had collapsed after China banned the importation of plastic recyclate. Countries which moved into the market for imported waste, such as Malaysia, Vietnam, Thailand and Poland, were imposing their own restrictions and not taking low-grade plastic.

Veolia said it was always open to discussions with the waste collection authorities about change and was at the forefront of plans in the government’s waste strategy, published in December, to harmonise local authority collections to a national standard.

But the company said: “In relation to the viability of recycling pots, tubs and trays, and some other plastics such as film, it is a complex matter and we advocate collecting only what is readily recyclable, until products are better designed.

“A priority is to increase the far higher tonnage of bottles, when we currently only get back around 57% of plastic bottles; we must encourage better separation at source. Without question, we would like to see all plastic manufactured so that it is recyclable, collected and then processed into mainstream feedstocks.”

Ellin said as the market in low-grade plastics had collapsed, he had some sympathy for Veolia. “If Brighton wants to increase the amount of plastic it is collecting, it will take a huge investment to put the technology in place at a time when the material has a negative value,” he said. “There is no market for it. So you can’t expect a private company just to take that on the chin.” He suggested the council should pay for the technology.

Brighton and Hove did not immediately respond to a request for comment, but Lucas said she would continue to push the council and Veolia to look again at their restrictive recycling contract. “I’ll be encouraging the council to write to Michael Gove urgently so we can finally start recycling a wider range of plastics,” she said.