Thousands of tonnes of waste paper produced by the government is being recycled as photocopier paper under a pioneering initiative launched by a Norwich-based business.

Banner Business Services, which is part of the o2o group (the former HMSO) has secured contracts with all major government departments including HMRC, the Home Office and the Ministry of Defence, which sees all waste paper collected and then recycled as part of a 'closed loop' system and used by the government departments which produced it.

Currently the paper is produced in Hamburg but Richard Costin, managing director of Banner, said if the volumes produced become large enough then it could trigger a UK based manufacturer to get involved.

Banner is one of the UK's largest suppliers of office products. The group employs more than 900 staff across the UK, with its headquarters in Norwich and distribution centres in Hampshire, Manchester and Northern Ireland. Turnover in 2010 was �207.6m compared to �187.5m in 2009. 2011 figures are expected to be about �193.5m.

The deal was part of a �37m annual contract agreed with the government last year, but the business is also seeing a growth in private sector customers, which already include Barclays, McDonalds, and Aviva because of its 'open book' system which allows firms to track all aspects of a transaction.

'Last year was quite difficult for us because of the decline in public sector volumes,' Mr Costin said. 'But there is a high level of interest within the cabinet in the closed loop system.

'Our private sector business remained fairly strong last year and we have caused some ructions within the industry because people can see exactly how much we pay for a product.'

He said that due to the government contract win, as well as growth in the private sector, 2012 will be an exciting year at the Norwich HQ in Duke Street.

'We're now seeing a revolution in the way that large organisations purchase their office supplies,' he added. 'The future for our industry is an 'open book' approach where customers know exactly, to the penny, how much a product will cost their business and have a transparent view of the 'cost to serve' and the profit.

'Our focus for 2012 is to increase market share in the private sector with our open, honest and transparent policy, while maximising our new government contract.'