MILLIONS of pounds of Gloucestershire's money is tied up in tobacco companies to boost pension profits by county councils and health bosses.

Anti-smoking groups reacted with outrage after it was revealed health chiefs and councils have £9 million worth of investments in two major tobacco companies.

NHS Gloucestershire, which runs NHS Stop Smoking, is one of the contributing employers to the county-wide fund which has 40,000 members.

Gloucestershire Local Government Pension Fund has holdings valued at £6.4m in British American Tobacco and £2.4m in Imperial Tobacco Group last financial year.

The pension scheme is open to all local government employees, including Cheltenham Borough Council, and Gloucestershire County Council administers the fund.

It invested £29.4m in the fund and its employees contributed almost £10m. NHS Gloucestershire paid £188,000 into the fund.

Murray Watson, chairman of Breathe Easy in Gloucester and the Cotswolds, which is a patient support group linked to the British Lung Foundation, called for health chiefs to review unethical investments.

He said: "It is ironic. We are trying to keep people out of hospitals and they are investing in companies which profit from smokers.

"I appreciate they are trying to make money but they should invest in other companies."

The fund is also available to employees of Gloucestershire's six district councils, all parish and town councils, the University of Gloucestershire and other public organisations.

Cheltenham MP Martin Horwood said the councils should "disinvest" from companies whose objectives are diametrically opposed to those of the NHS and Cheltenham Borough Council.

He said: "It also strikes me as a pretty poor long-term investment, given the risks associated with the tobacco industry."

A spokesman for NHS Gloucestershire gave no indication it would demand ethical investment from the fund.

She said: "We understand Gloucestershire County Council monitor closely the nature of investments made and seek to achieve best value with the funds available."

Lee Coates, director of the Ethical Investors financial advisers company in Cheltenham, said any member of the pension fund has a right to dictate what the county council does with the money.

He said: "For 26 years there has been no difference in return from ethical and non-ethical funds.

"All pension funds should have a written statement disclosing the social, ethical and environmental policy."

Councillor Ray Theodoulou, (Cons, East Cotswolds) chairman of the pension committee which manages the scheme, said: "We invest in legal companies which provide the best value for taxpayers and pensioner's money.

"If the money put aside in the pension fund to pay for employees pensions isn't enough, council taxpayers have to make up the difference.

"Investments are made in line with the advice of professional investment advisers. I have no intention of changing to a situation where investments are made in line with the political views of individual councillors."

The fund performed badly last financial year, falling in value by 22 per cent to be worth £738 million in March 2009. Its value has since recovered and at December 31 2009 was worth £976 million.