"Why won't governments just force companies to use less packaging in the first place?"
They do, we have an extensive european and domestic regulatory and legislative regime covering waste including laws on the reduction and recycling of packaging for packaging producers and retailers.
If you don't think it goes far enough then you should write to your MP. You should also be proactive in making purchases that minimise the amount of waste YOU create. Your waste your responsibility, not the government's.
There's more legislation in the pipeline too which will see Local authorities and private sector waste handlers having to up their game to ensure that at least biodegradable waste is managed better. European Landfill diversion targets are being doubled and it looks as though Defra will be introducing legislation to entirely ban certain biodegradable wastes to landfill.
One solution for certain biodegradable wastes is as a fuel stock for heat or combined heat and power generation (via incineration, or maybe, possibly even gasification or pyrolosis). However, these plants are few and far between because wherever they plan to put them there is usually a public protest.
I can tell you that at the moment a significant chunk of contaminated wood waste from this country is chipped and shipped to Germany for use as fuel in a large energy plant over there simply because there is no demand for this material in the UK.
If you want more information on the impact to the environment and human health of waste incineration plants, take the time to read the reports and information sheets provided by the Environment Agency on their website. Modern plant and abatement technology mean that the impact is negligible.
I would also point out to ABETADAD that you need to take into account transmission losses across the UKs aged national grid when discussing the relative efficiency of centralised power production. Hence gas power stations connected to the national grid and located miles from the source of demand are nowhere near as efficient as a biomasss or waste CHP plant connected to a decentralised heat and power network.