A controversial Downing Street adviser has accused business secretary Vince Cable of being a socialist who "appears to do very little to support business" after he saw his plans to make it easier to fire workers torpedoed.
Venture capitalist Adrian Beecroft, who wrote a report for Number 10 on changes to employment law, said the Liberal Democrat's objections to his plans were "ideological not economic".
"I think he is a socialist who found a home in the Lib Dems, so he's one of the left," he told the Daily Telegraph.
"I think people find it very odd that he's in charge of business and yet appears to do very little to support business."
Beecroft also attacked deputy prime minister Nick Clegg for "always threatening to go nuclear" when he does not get his way.
His attack came the day after Clegg was extraordinarily accused of being a "communist" by Tim Hands, master of Magdalen College School in Oxford, after the Lib Dem leader set out plans to increase social mobility.
While Cable is unlikely to be troubled by Beecroft's accusations, as it is well known he sits on the social democratic wing of the Lib Dems and even began a recent conference speech by jokingly addressing delegates as "comrades".
Beecroft report to Downing Street on employment laws exposed deep tensions in the Coalition.
The "compensated no-fault dismissal" scheme is the most divisive proposal in a report, which was published ahead of schedule after being leaked.
Cable dismissed the idea as "complete nonsense" but many Conservatives backed the plans.
Beecroft said the Conservatives are being "hugely held back by the Lib Dems".
He added: "I think you could put together a bunch of suggestions out of the report, as a coherent programme, that would say, you know, we are tackling the issues that business has with employment law but the Lib Dems will have none of it.
"Nick Clegg is always threatening to go nuclear and dissolve the whole thing if he doesn't get his way with this, that and the other.
"Which you'd think actually must be a hollow threat... Therefore, why can't the government be more robust? I don't know what the answer is. But it is disappointing."
Beecroft claims the British economy will grow by 5% less than expected, around £50bn if the government fails make radical reforms to employment laws.
He said senior Conservatives were initially behind his radical plans.
"I'm talking about Steve Hilton, that group and they assured me that David Cameron wanted to do the whole thing. Whether that's right or not I'm not sure but that was the strong impression I got.
"I've been in meetings with Oliver Letwin and Ed Davey, where Oliver Letwin was all for and Ed Davey was totally against."
Beecroft's report calls for compensation to be capped at £12,000 for employees removed under the scheme, which he claims will make it more acceptable to workers and unions and eliminate many employment tribunal cases for constructive dismissal.
Tory MPs have suggested that the move would encourage businesses to hire workers by removing concerns that they may not be able to afford to get rid of under-performing staff.
But Clegg publicly condemned the proposals yesterday telling the Sutton Trust conference on social mobility: "I don't support them and I never have. I've not seen any evidence that creating industrial-scale insecurity amongst millions of workers is a way of securing new jobs.
"So far, there's just no evidence that in the highly flexible labour market that we have, comparatively speaking, for instilling greater insecurity and let's be blunt, fear, amongst workers, at a time of great economic anxiety as a way of fostering new employment."
Downing Street has made clear that David Cameron has not dismissed the proposal out of hand.
A spokeswoman said the prime minister was weighing up options for making it easier for businesses to employ people and achieve growth, but was not "wedded" to any particular solution.
The document was commissioned by the Business Department and submitted in October, but it has been kept under wraps amid reports of friction between Tory and Lib Dem ministers.
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