MARGARET Thatcher squandered billions from North Sea oil on a short-term consumer boom when she should have invested it, Lord Heseltine told Holyrood last night.

The former defence secretary said the focus on personal consumption, fuelled by tax breaks, was a key failing of the “Thatcher philosophy”.

The Tory peer, whose failed leadership challenge helped oust Mrs Thatcher from Downing Street in 1990, was speaking at the opening of the Parliament’s Festival of Politics.

He said: “This country over consumes and under invests. If I have a criticism, which I do, of the Thatcher philosophy... they had the incredible windfall of North Sea oil and basically it was spent on consumer boom.

“One of the manifestations of that was the mortgage interest tax relief which has long since gone, which subsidised house prices.

“In some ways my preference would have been less popular, because I wanted the money to go into investment, to create a sovereign wealth fund for example, and too much of it went into personal consumption.”

Lord Heseltine, 85, a passionate Remainer, said his biggest mistake in politics was advising then PM John Major to offer a referendum on joining the Euro at the 1997 election.

He said: “All the qualifications were swept out of the window – European referendum! – and from that moment on the right-wing had got the initiative. So that is how it happened, and I’m sorry.”

He said he didn’t have a “high regard” for President Trump, but the UK had little choice but to deal with him, so should use “care”.

Despite the Novichok attack, he also said the UK should “build bridges” with Russia, as it had more in common with it than against it.

On independence, he said: “I’m appalled by the prospect of the fracturing of the United Kingdom, which is a sort of mini-fracturing of Brexit.

"I don’t want to get tear-jerking about this, but if I look at the record of the British Empire and the British Commonwealth, and the incredible strengths which Scotland has contributed to this 300 year human achievement, the idea of fracturing it I find unbelievable.”

He asked the audience wrily: “Is this really substituting Edinburgh for Whitehall? With the centralism moved a few hundred miles north, will that really change anything very much in Scotland?”