31 October 2012 Last updated at 07:49 ET 
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Lord Heseltine: "In a sense it's a criticism of Whitehall"
Lord Heseltine, the former Conservative party deputy prime minister, has challenged the government to take bolder action to stimulate the economy.
In a new report, commissioned by Downing Street, he says that people think the UK "does not have a strategy for growth and wealth creation".
He wants the funds used to support industry to be distributed locally, rather than through central government.
Labour said his message was "a damning indictment" of the government.
His review makes 89 recommendations to help industry. One of its key aims is to move £49bn from central government to the regions to help local leaders and businesses.
The aim, he said, was to devolve power from Whitehall and re-invigorate the big cities that had fuelled the growth and wealth that the country had enjoyed in past decades.
Chancellor George Osborne said he would "study it [the report] very carefully".
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This is a war cry from the man whose golden locks and virtuoso performances earned him the nickname Tarzan"
End Quote Lord Heseltine, head of the Department of Trade and Industry in the 1980s, said the government should allocate growth funds through new Local Enterprise Partnerships (LEPs) that are being established in England.
In 2010, the government invited local business and civic leaders to come forward with proposals for establishing LEPs that reflected natural economic geographies.
Lord Heseltine believes these bodies could be key to stimulating regional growth, but said that, at the moment, LEPs did not currently have "the authority or resource to transform their locality in the way our economy needs".
LEPs' powers should be enhanced, giving them responsibilities for growth and long-term strategies, and also get involved in social provision, he said.
'Inertia' "Once a LEP has been allocated funds, it should be free to implement its strategy, accountable to its local community but free from central government diktat," Lord Heseltine said.
Local business and political leaders are best placed to invest the money, he says in his report, No Stone Unturned.
At the national level, however, the government should show greater leadership in promoting major infrastructure projects. A national growth council should be created, chaired by the prime minister and with a cross-government focus.
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I have told it as I see it, but I have told it in a way that is very supportive of the government"
End Quote Lord Heseltine "Central government must retain control of important, large scale infrastructure projects. This includes our motorway network, national rail network and airports, as well as our energy networks," Lord Heseltine said.
In all these sectors, there must be greater investment and a clearer strategy of what the UK needs. He cited the delay and "inertia" over building extra airport capacity in the south east.
Ahead of the next general election, Lord Heseltine wants the political parties to make manifesto promises on how they will tackle the problem. But he argues that preparatory work on the various solutions - "which are known and have been widely debated" - could start now, short of actually awarding construction contracts.
Lord Heseltine backs the chancellor's wish that UK pension funds get involved to provide funding for infrastructure spending. With pension funds' return on investments in equities at historically low levels, for example, ways could be found to provide a better yield from infrastructure spending.
He said: "There is a well of money looking for a better return than currently available in the market or only available in higher yielding equities with attendant risk.
"In view of the exceptionally low yields currently available, there is a one off opportunity now to match the needs of pension funds with the urgent need to boost investment in the UK's key infrastructure."
'Pulsing' When in office Lord Heseltine was well known for promoting intervention to back business and the regeneration of urban areas.
The report is presented in a highly individual style, fronted by a cartoon of Lord Heseltine shining a torch under a rock, with the caption "In search of growth".
He calls it "one man's vision", and says "there is opportunity on a grand scale".
He said that throughout the regions there was excellence in industry, commerce and academia, which should be extended and that cities were "pulsing with energy" that should be unleashed.
He backed the government's economic strategy, and said it was taking the right path to recovery. But later, in an interview with the BBC, Lord Heseltine said there was "an urgency" about stimulating growth. "Across the world there are emerging economies that want our jobs and our wealth," he said.
He wanted to "unleash the power of our big cities", like Birmingham, Newcastle, and Manchester, which had generated the growth of past decades. "London has acquired too much power", he told Radio 4's Today programme. "We need to mobilise the skills of provincial England. I want to shove power out of Whitehall, into the provinces."
Lord Heseltine admitted his ideas would go down like a "lead balloon" in parts of Whitehall because he was suggesting government departments should lose some of their power.
Asked whether his conclusions might be at odds with thinking in the Treasury, Lord Heseltine said: "I do not work for the Treasury, I work for George Osborne. And George has been behind this initiative."
He added: "I have got baggage, they know my views. There are bound to be things where they say, 'oh my god, here he goes again'. I have told it as I see it, but I have told it in a way that is very supportive of the government."
'Challenge received wisdom' Mr Osborne said the report provided food for thought.
"I wanted Lord Heseltine to do what he does best: challenge received wisdom and give us ideas on how to bring government and industry together. He has done exactly that," he said.
Business Secretary Vince Cable said he would also be considering the report and would respond in the coming months.
Shadow business secretary, Chuka Umunna, said aspects of Lord Heseltine's report chimed with Labour's own industrial policy.
"Labour has led calls for an active government approach to support business and underpin regional growth - it is good to see Lord Heseltine echoing this in his report. We will examine his proposals and consider which ones we can take forward," he said.
"We hope that ministers will take Lord Heseltine's proposals seriously."
Business backing The Institute of Directors (IoD) business group reacted positively to the broad thrust of the report's proposals.
"We welcome the idea of encouraging more devolution to the local level, and ensuring business has the opportunity to make heard its priorities on local issues," IoD director general Simon Walker said.
"Business leaders and the various business organisations have long experience of co-operating to encourage a positive business environment in the UK, and we are committed to continuing that work."
Meanwhile the TUC also backed the report but warned that it needs to be embraced across government in order to make a difference.
"The TUC shares Lord Heseltine's vision of collaboration between the public and private sectors, with unions and employers working together to promote growth," said general secretary Brendan Barber.
"But he will have his work cut out in convincing ministers of this new approach, who are going to have to change their attitude towards civil servants, public bodies and unions if they want this strategy to succeed."
Lord Heseltine will formally launch his report later on Wednesday at an event in Birmingham.
