Neil Bentley, CBI deputy director general, said there was mounting concern that localism and a lack of clear detail about alternative financing would hamper private sector attempts to drive the recovery.

He said: “It is still not clear how the national planning debate fits with localism. There is clearly friction between the national growth agenda and local decision taking.”

“We are worried that the localism agenda is not aligned with the growth agenda and much more work is needed to resolve the issues.”

The CBI welcomed communities secretary Eric Pickles’ initiative to galvanise council’s into entrepreneurial thinking but echoed many house builders warnings that councils were failing to see the benefits offered by the New Homes Bonus.

Bentley said: “The number of planning consents coming through the system is plummeting.

“We think the New Homes Bonus to encourage housing has legs but we are worried that local authorities won’t grasp the nettle and use housing as a way to raise revenue.”

The CBI Construction Council also raised concerns about the Government’s new-found distrust of PFI and a lack of clear framework to deliver the Green Deal.

Bentley said: “PFI has become a bit of a dirty word in the debate about finding, but we have not heard enough about alternative investment models.”

“We need some clear signals in the Budget to encourage investment.”

He called on the treasury to work with the construction industry to encourage the inflow of private sector funds.

The CBI Construction Council also wants to see the Government lower the barriers and risks associated with infrastructure to encourage pension funds to invest.