An independent expert has accused the big consultants of ‘group-think' as he called for more Local Government Pension Scheme (LGPS) assets to be invested in Britain.

Pensions consultant John Ralfe said the amount of overseas assets held by the LGPS – one of the largest pension schemes in Europe – was ‘spectacularly large' while the value invested in the UK stock market was ‘pretty small'.

He said: ‘About 40% of the risky assets are overseas.

'If you move that from 40% to 30%, you're talking about bringing back billions to the UK to be invested in the UK – around £40bn.'

Mr Ralfe called for greater LGPS investment in ‘mature' UK infrastructure so that the money coming in was ‘reliable and low risk'.

Last year communities secretary Michael Gove's Levelling Up White Paper also highlighted that ‘only a tiny fraction' of LGPS funds were allocated to local projects.

The paper suggested that £16bn in new investment would be unlocked if all LGPS funds allocated 5% to local investing.

Mr Ralfe said: ‘20 years ago pension funds didn't hold very much overseas.

'The rise of globalisation at the turn of the millennium was definitely where it started.

‘The big investment consultants are now guilty of group-think.

'Changing it is not easy.

'It will take time, effort and energy.'

Steve Turner, a partner at big consultancy Mercer, said the positive performance of US tech stocks in the last 10 years had driven greater investment of assets abroad.

He continued: ‘Over the last 10 years the LGPS has not deliberately not invested in the UK but there have been opportunities and better sources of diversification elsewhere.

'I think Brexit was an issue.

‘That may change.

'The market has definitely reacted to perceived demand and we are seeing a lot of interest in LGPS clients setting up local impact portfolios.

'It's probably a new one for Mercer in the last 12 months or so.'

Colin Cartwright, a partner at big consultancy Aon, added: ‘Investing globally has been much more beneficial over the last 10 years.

'I don't think you're going to see a huge change.

‘I think it will be hard to mandate the LGPS in a certain way.

'Legislators have to remember that funds have fiduciary responsibilities.'