The Government has been urged by a former minister to spend more money on boosting economic growth in the regions.

Lord Heseltine urged the coalition to produce a long-term strategy for economic growth, including firm commitments against which it can be held to account.

In a series of recommendations, Lord Heseltine said the Government should allocate up to £250,000 of new public funding to local enterprise partnerships (LEPs) over the next few years.

A new national growth council should be established, chaired by the Prime Minister, with a cross-government focus on driving growth and wealth creation, said the report.

Growth funds administered by different government departments should be brought together into a single pot for local areas, it was suggested. Local partnerships should bid for funds from central government for a minimum of five years starting from 2015/16, said Lord Heseltine.

John Longworth, director general of the British Chambers of Commerce, said: "Lord Heseltine's analysis of the state of the UK economy is compelling. Businesses will welcome his call for steady, long-term thinking to improve the UK's economic performance. Yet Heseltine's prescription for action focuses too much on institutions, rather than on the fundamental barriers to business growth. Ministers should think carefully before committing to a restructuring of government, and focus first on the key constraints facing the real economy."

The 228-page report, entitled No Stone Unturned, also recommends that local authorities should have a new legal duty to consider economic development and that all two-tier English local authorities outside London should pursue a path towards unitary status.

Shadow business secretary Chuka Umunna said: "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 hope that ministers will take Lord Heseltine's proposals seriously, although the briefing against the report from within Government in recent days suggests they are unwilling to listen."

Business Secretary Vince Cable said: "Lord Heseltine's independent report reflects his vast experience of government and business. It raises a number of important and cross-cutting issues that impact on the Government's ability to interact effectively with business throughout the country. That is precisely why the Chancellor and I asked Lord Heseltine to conduct this root and branch review, and I thank him for it. A few weeks ago, I set out my own plans for a long term industrial strategy, based on government and industry working together in partnership in those areas where we can be world leaders. Lord Heseltine's findings show where government can improve its performance in delivering better interventions. We will now need time to consider its numerous recommendations and will respond in the coming months."

Chancellor George Osborne said: "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. This is a report bursting with ideas and we will study it very carefully."