Lord Heseltine, former deputy prime minister and secretary of state for the environment, called for control of the £10bn regeneration quango budget to be handed to local authorities.
Speaking today at the Northern Regeneration Summit in Manchester, the Conservative party grandee said: "By my calculations there is an annual budget of £10bn siphoned through quangoes from central government to do work which is essentially local.
"This is due to the same old problem of distrust by central government of local government. I would hand back the £10bn but make local authorities bid for the money in a competitive process. Local authorities would be expected to produce corporate plans to say what they would do to create excellence in their communities.
Heseltine went on: "I would also have a bonfire of the central controls governments impose on what councils do."
He criticised the allegiance of local agencies and the ministries they effectively serve and called for a "community of self interest at a local level" to reverse the "hollowing out" of councils by successive governments.
He proceeded to advocate the creation of new city regional unitary authorities with elected mayors combining council leader and chief executive powers.