He is the Tory elder statesman seen by some Conservatives as the traitor who brought down Margaret Thatcher. But despite his maverick tendencies, Lord Heseltine – once known as Tarzan because of his golden mane of hair – has found his way back into government , appointed as David Cameron's most trusted adviser on economic growth.

Heseltine, who turned 80 this year, was tasked with delivering the 2012 No Stone Unturned report on how to boost local growth. Of the 89 recommendations, 81 were accepted.

It is because of his preoccupation with his current work in government that Heseltine says he has not given much thought to the autumn statement, which will update the government's plans for the economy based on the latest forecasts.

"I thought we were going to talk about urban renewal and renaissance and all that," he says impatiently, adding, "I am not going to invent a mini budget for you."

One of the key recommendations of Heseltine's report was to allocate up to £60bn from central government to the English regions to help local leaders and businesses.

Heseltine stresses the 39 local enterprise partnership areas , in which businesses and councils team up to promote economic development, are a positive vehicle for growth.

Based on recommendations in his report, Heseltine secured a single pot of £20bn worth of funding of which local enterprise partnerships can now bid for.

"All this evolves from Greg Clark's pioneering city deals and is an extension of that line of thought. The concept of a place-based approach to economic planning is a major change from the way we have gone about things in the past. "

Heseltine admits the scale of change is not as big as he had hoped but, he adds, it is bigger than anyone else has achieved.

Asked whether he would go further and raise borrowing caps for councils wanting to build houses he is quick to respond: "That has the effect of raising public expenditure. I am clear I would not produce any initiative that had the effect of doing that."

Lord Heseltine has been around long enough to know that history repeats itself. "There is a rather sort of quirky joke," he says. "I have been involved in reform in local government since the 1960s and time and time again we have done this, that and the other." Sage-like Heseltine says that in the future he thinks local government will be much more about place-based policies.

As for tax-raising powers for mayors, and in particular the adoption of recommendations in the London finance commission report, which would see mayor Boris Johnson gain new powers over stamp duty and other taxes, Lord Heseltine says that government has done a sensible thing in letting business rates come under the local economy. He says the problem with allowing more revenue powers to lie with local authorities is that the earning capabilities of councils varies. With the single pot arrangement, he adds, mayors will have a lot of control and discretionary power.

"I want more powerful councillors and more powerful people in those councils and I want them to be paid properly. It is a ludicrous situation in this country today: we have this extraordinary phenomenon where the leader of a council gets £30,000 a year and a chief executive gets £180,000."

Heseltine does not propose pay rises for elected officials, but says combining jobs to create a directly elected council chief executive could be one solution. The only people who can be council leaders at the moment are those who either have the money to afford it, or are public employees and this isn't the right criteria, Heseltine says.

One local leader for whom Heseltine has great admiration – and has himself been compared to – is Boris Johnson. And it is leaders like him, Heseltine says, that central government cannot ignore. "But they can ignore the leader of some district council," he adds.

On the subject of infrastructure, talk soon turns to HS2. "I am amazed by which figures are used or misrepresented," Heseltine says.

"Those that say we cannot afford HS2 are forgetting that we are doing Crossrail and that is about £2bn a year; so why can we afford £2bn a year on Crossrail but not HS2? That is such an idiotic question yet no one is asking it. What has gone terribly wrong on HS2 is the public relations."

Heseltine says with projects that impact so far away in the future that, of course, it is a risk. "You don't know; you have to believe and other countries do it," he says, adding that fast trains are coming everywhere. Heseltine is confident that HS2 will happen with Labour support because the party's heartland is in the north, where the project has most of its support.

As for the Conservative party, Heseltine believes David Cameron has gone to great lengths to bring the party back to a one nation mode. However, he also agrees with Nick Boles who, that morning, said that the Conservative party is still viewed as a party for the rich.

He says, with unfaltering loyalty, that the government's economic strategy so far has been courageous. The former deputy prime minister has little sympathy for councils that complain about cuts, dismissing Sir Merrick Cockell's claims that budget reductions are "unsustainable", saying it's his job to say that.

"I was secretary of state for six years in the department of the environment and they (councils) said that (cuts were unsustainable) every year and I was the one doing the cuts."

There is no alternative but to make cuts, says Heseltine. "There ain't no choice, as Liam Byrne eloquently said, 'there is no money left."

He said county councils in particular talk about cuts being unsustainable, but the Tory grandee says they could save £10m a year by being unitary. Why don't they do it? "Because Turkeys don't vote for Christmas," Heseltine quips.

• Want your say? Email sarah.marsh@theguardian.com to suggest contributions to the network

Not already a member? Join us now for more comment, analysis and the latest job opportunities in local government.