Councils would be free to pump as much as £22Bn more of pension fund investments into infrastructure under proposals announced by Local Government Secretary Eric Pickles.

That infrastructure could include homes, roads and high speed rail, according to Department for Communities & Local Government.

This would double the amount councils can currently invest from pension funds. 

The Local Government Pension Scheme England and Wales is administered by 89 separate local funds that hold combined assets worth £150Bn. Pension fund rules are there to make sure risks are spread across different types of investments to give taxpayers long term protection. Fund managers are currently limited in the amount they can invest via partnership arrangements which include many types of infrastructure investment.

The proposals out for consultation include an option to increase the current limit of 15% to 30%. “This would clear the barriers standing in the way of better council investment giving them the scope to inject up to £45Bn,” DCLG said.

Investment decisions would remain the responsibility of individual pension funds which have a duty to protect the local council taxpayers and local services and to ensure there are no conflicts of interest.

The consultation runs for six weeks until 18 December.

CBI director for business environment Rhian Kelly said: “Local government pension funds are some of the largest in the country and many already have experience of investing in infrastructure and housing. Infrastructure projects should be a natural fit for these funds which have very long time horizons and are looking for healthy investment return. Lifting restrictions should allow them to take a more prominent role in deepening pension funds’ involvement in infrastructure financing.”

To view the consultation document go to http://www.communities.gov.uk/publications/localgovernment/lgpsinvestmentpartnerships