The shadow work and pensions secretary has promised to look into proposals to invest billions of pounds in local government pension pots locally.

Birmingham Councillor John Clancy (Lab, Quinton) wants to see £2.2 billion from local government schemes put into regional investment bonds and invested to benefit local communities.

Coun Clancy raised the proposals at a party meeting, and shadow secretary of state for work and pensions Rachel Reeves agreed it was worth investigating.

She said: “There is a restriction on what local authorities and their pension schemes can put into local assets. It is about 15 per cent.

“You can put more, as local government pension schemes, into investment overseas than in your local community into housing, roads, infrastructure, generating a return.

“We need to look at that again because there is a need to invest in these assets that will yield a return for local pensioners but also for local community.

“This is certainly something we need to look at.”

Local government pension funds currently have assets of £215 billion invested around the world and if combined would be the fourth biggest in the world.

Mr Clancy wants the money to be invested more locally through new regional banks.

The proposals are set out in a new book, called The Secret Wealth Garden, which also claims councils are wasting money by paying almost £500 million a year to city financiers for investment advice.