The senior Conservative in charge of a £1.4 billion fund to boost regional economies has accused trade unions of exaggerating the effect of funding cuts.
Lord Heseltine, the former deputy prime minister, predicted that complaints about cuts would soon end as the public realised private sector employers were replacing jobs lost in the public sector.
He claimed: “Everybody you listen to has got a harrowing story about why their particular organisation is being reduced or is going to be reduced. A proportion of the people being interviewed grossly exaggerate the consequences because it is their job to do so.”
Lord Heseltine is chairing the panel considering bids for a share of the Government’s £1.4 billion Regional Growth Fund, which is designed to help businesses create jobs in areas of the country which are disproportionately dependent on public sector employment.
He revealed that 464 bids had been received from across the country, including 72 from the West Midlands, requesting a total of £2.5 billion in funding nationwide. But only £300 million will be distributed in this first round, and the entire fund only comes to £1.4 billion over three years.
Lord Heseltine also hinted that many of the bids received may be ineligible for funding. He stressed that the aim was to create jobs, and not to pay for long-term “imprecise concepts” such as major infrastructure projects.
Speaking to regional newspapers at the Department for Business, Innovation and Skills offices in Whitehall, Lord Heseltine said: “In aggregate, the fund is very substantially overbid.
“But we must make it clear that this is before any analysis of the quality of the bids and the relevance of the bids to the criteria we have to follow.
"Inevitably there will be a significant number that will not qualify for various reasons or might actually need to be resubmitted.”
Business leaders in the West Midlands have complained that the criteria for bidding was not made clear until the last minute, when it emerged large infrastructure schemes – such as a request for funding to support the expansion of Birmingham Airport – were unlikely to be successful.
Instead, the fund is expected to back “quick wins” which create jobs in the short term.
But Lord Heseltine insisted he and colleagues had made the criteria clear as he met business leaders across the country.
“The fact is that in going round, was have articulated as clearly as we can that jobs is what we are in the business of doing.”
The fund would play a role in ensuring industry was replacing jobs lost due to spending cuts, Lord Heseltine said.
Birmingham City Council is considering proposals to lose up to 7,000 jobs as it attempts to save £212 million in 2011-12.
He said: “What is happening now is, because the cuts are now the agenda, the whole media focus is on those who are being cut, or their spokesman.”
Lord Heseltine added: “If you get somebody from the Unite union you know perfectly well you are going to be in tears by the end of what he has to say if you believe a word of it, because he is paid to articulate the worst possible scenario.
“It was ever thus. It’s called politics.
“But the fact is that changing the emphasis of the way in which people think of their lives and play a role in their lives, it takes a significant period of time.
“By the end of this Parliament I have no doubt David Cameron will be able to say ‘look, we kept our nerve, look what’s happening’.”
The debate about cuts would turn out to be “a relatively short term debate,” he said. “My view is that the consequence of the cuts will be nothing like as profound as the contemporary debate would indicate.
“The reason for that is that the private sector, many parts of it, are growing significantly.
“And the private sector is incomparably bigger than the public sector.”