Nick Clegg and Vince Cable will today announce a white paper on regional growth.
The Regional Development Agencies (RDA) are being abolished and will be replaced by the Regional Growth Fund (RGF) which will support the growth of the private sector in England.
"The essence of what the government is now expecting to see, and in my view rightly, is the private sector lead the recovery," said Lord Heseltine, who will chair the panel responsible for distributing the funds.
Relying on the taxpayers' money in order to support the regions is "yesterday's language," he told Evan Davis. "The object of the exercise is to stimulate people to create jobs in the private sector".
The purpose of the RGF will be to provide a fund of £1.4bn and then make the "best judgements available" in order to distribute it to the private sector which will be bidding for it.
"All my political career, and actually before it, we have seen the transfer of wealth and decision making and power from the provinces to London," he said.
He believed that "certainly had a very adverse effect" and it was "important to recognise the imbalance and to pursue policies to do something about it".
But the chief executive of the North East Chamber of Commerce, James Ramsbotham, thought the regional restructuring was "extremely confusing".
He said the RDA "has done a huge amount of good" in the North East and was concerned about its abolition.
He, however, agreed that "across the country certainly there has been some money wasted which the government is right to look at very hard".
At the same time, he hoped the regional fund was not "about jam spreading" and he said the government's investment directed from London gave him "a huge concern".
Get in touch with Today via
or text us on 84844.