Firstly the government get a big slice of it from vat and secondly it goes to "good causes". Many large shops have created foundation trusts purely to bank this money with and the rules are not that strict on what actually happens to the money.
Everyone keeps saying it goes to charity and that is not true.
Even if usage goes down 90% with stores like sainsburys now doing jumbo thick bags for 5p that must use about 10x the plastic we will be no better off. Maybe worse off as the old bags biodegraded in a few years, these jumbo thick bags will probably take a century!