The Cumbrian company behind the world's first coffee cup recycling plant has welcomed a £1m fund to help expand and improve paper cup recycling facilities across the UK.

The Cup Fund was launched today by Starbucks and environmental charity Hubbub.

Councils, recycling companies and social enterprises will be invited to bid for grants of up to £100,000 to create at least 10 large-scale recycling programmes.

The scheme will be financed by the 5p paper cup charge or 'latte levy' introduced by Starbucks last year in an effort to reduce the overuse and waste of an estimated 2.5bn disposable cups every year.

The funds will be put towards the challenge of collecting disposable cups and transporting them to specialist recycling facilities like that in use at James Cropper Plc in Burneside, near Kendal.

As the home of the world's first recycling facility dedicated to used coffee cups, James Cropper can take the cups and turn them into luxury papers within a matter of hours.

The company's CupCycling facility takes the waste cups, adds water and heat and separates the plastic lining from the paper exterior.

The paper is then used to make luxury papers for brands including GF Smith, as well as packaging for cosmetics company Lush and bags for Selfridge's.

Richard Burnett, market development manager at James Cropper said he hoped the Cup Fund would see more cups coming to be processed at the facility.

“The launch of the Cup Fund marks a step change, taking the fantastic work being done in smaller pockets around the UK to a much larger, national scale," he said.

"Having created the world’s first method of upcycling used coffee cups, we see the enormous value in that waste stream, and we know it can be turned into fantastic, premium paper and packaging.

“With the capacity to upcycle 500 million coffee cups per year, we can offer a significant part of the solution to how the country creates value from single use cups. We are ready and waiting to work in partnership with the grant winners who choose CupCycling for their schemes.”

The plant was opened by the Queen in 2013.

It initially began by recycling waste material left over from the process of making takeaway cups for McDonald's, but now takes its used cups, as well as those from Costa, Starbucks and a host of other organisations, including Gatwick Airport.

Last year, it dealt with about 30 million cups.