The money will be raised from the private sector so it will not derail the ongoing deficit reduction plans.

The Sunday Times reported that the Government hopes to mobilise the mountain of private sector cash tied-up in pension funds and owned by insurance companies.

The Department for Business, Innovation and Skills has been charged with drawing-up the growth plan for construction to lead the way in boosting the floundering economy.

The money will be used for infrastructure investment including power stations, social housing and road building.

The schemes will be in addition to 40 road, rail and national grid improvements which are already in the pipeline and will be accelerated.

The move follows pressure from construction chiefs and business leaders at the CBI to boost investment in the UK’s infrastructure.

The Government hopes the timing will appeal to private sector investors frustrated by the low current rate of return from traditional investments.

Business secretary Vince Cable said: “We know there’s a large amount of institutional investment in pension funds and insurance companies looking for a safe return.”