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".
Lord Heseltine recommends distributing growth funds for industry more 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.
Chancellor George Osborne said he would "study it [the report] very carefully".
Lord Heseltine, who was also head of the Department of Trade and Industry in the 1980s, says Local Enterprise Partnerships' responsibilities should include wealth creation as well as focus on social provision.
He calls the current climate "the worst economic crisis of modern times" and argues that local business and political leaders are best placed to invest the money.
The main points of the report, called No Stone Unturned: In pursuit of growth, include:
- a major devolution of funding
- making a smaller and more skilled government machine
- enhancing the standing of Local Economic Partnerships (LEPs) to bring together private and public sectors
- more government leadership for major infrastructure projects
- a role for employers in education
Analysis
The government that commissioned this report is not spared Lord Heseltine's criticism. The coalition's growth plans are "piecemeal" and create complexity, he says. It needs to be more strategic and confident.
The recurrent message he heard is that the UK doesn't have a strategy for growth and wealth creation.
But at the heart of this report is a call to unwind a century of centralisation by shifting money and the responsibility for spending it away from Whitehall to England's cites and regions.
Lord Heseltine has long believed government should intervene to support business and help regenerate urban areas. He wants to see a big chunk of central government funding for business and job support to be transferred to local enterprise partnerships.
The report has been welcomed by the Treasury - which said many of the recommendations are an evolution of the government's strategy. Labour said it echoed their call for an "active" government approach to growth.
When in office Lord Heseltine was well known for promoting intervention to back business and the regeneration of urban areas.
His private business interests included a property business and publishing the advertising industry bible Campaign Magazine.
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 there was excellence in industry, commerce and academia, which should be extended and that cities were "pulsing with energy" that should be unleashed.
However, he backed the government's economic strategy, and said it was taking the right path to recovery.
'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.
"Start Quote
End Quote Brendan Barber TUCHe will have his work cut out in convincing ministers of this new approach"
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 backingThe 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.
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