It is but this scheme is because you apparently need a kick in your balls to encourage other people who don't recycle.
That, I think, is the problem in a nutshell.
I disagree with the idea of replacing a system that works efficiently with one that at best works less efficiently in order to make things worse for people who already recycle in the hope that doing so might maybe possibly somehow coerce people who don't recycle into doing so.
As for littering, people do that because they don't give a crap. Making some of the litter worth 20p won't change that. Fining some people £50 for littering might change that. If there was anything more than a negligable chance of being fined for littering, that might make people who litter think twice about doing so. But penalising people who already recycle is an easier target, both practically and politically.
I'm not even convinced the goal of the scheme is to reduce waste and/or reduce littering. I think the goal is for politicians to be seen to be Doing Something without them actually having to do anything or take any political risk.