Heseltine angers Tories as he embraces public sector

Michael Heseltine earned the ire of his allies in the Tory party today, with a regional growth review which was far more supportive of the public sector than ministers would have wanted.

The former critic of Margaret Thatcher earned glowing reviews from trade unions when his paper suggested public and private sectors should work interdependently, taking inspiration from the Olympics.

"I have learnt that there are some things that only government can do to drive growth," Heseltine said.

TUC general secretary Brendan Barber was overflowing with praise.

"Lord Heseltine's review offers a refreshing new strategy for growth.

"It must be embraced across government if it's 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.

"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."

The review , entitled 'No Stone Unturned', demands greater investment in science and research as well as smarter use of procurement to boost British industry.

It also lays out plans to boost the powers and lending capacity of the British Business Bank.

It would also strip Whitehall of billions of pounds in funding and hand it to the regions.

It is a far cry from the growth programme spelled out by George Osborne, which relies on a massive reduction to public services, with half a million jobs being created in the private sector to compensate.

Away from the details, even the mood music of the centrist proposals contrasts sharply with the government's critical approach to the public sector as a drain on state finances.

And the relentless focus on a coherent growth strategy suggests an implicit criticism that the current government programme lacks one.

The government started briefing against the report in the days leading up to its publication.

"It's a damning indictment of this government that, half way through this parliament, a former Conservative Cabinet minister is still calling for a plan for growth," shadow chief secretary to the Treasury Rachel Reeves said.

Labour is expected to handpick the proposals in the report it is willing to support, but they are likely to outnumber those taken up by the government.