Changes to employment laws are essential to the UK’s economic survival, the former Defence Secretary Dr Liam Fox has said.

Fox reckoned the changes would make life easier for employers and make them more likely to take on new staff and he urged his fellow Tories to “take on” their Liberal Democrat coalition partners on this issue.

Claiming that there was “obviously an argument inside the coalition” about the proposed changes, Fox told the BBC: “The objections inside government and outside government, but yes, including some of the arguments put forward by our coalition partners, they need to be taken on and in my view overridden – otherwise we become about managed decline for Britain, not international competition.”

Asked if the Prime Minister should overrule the Business Secretary Vince Cable on the issue, Fox said: “It’s not just David Cameron, the government itself… needs to understand the importance of this.”

He went on: “Among Conservative activists there is the perception that the Liberal Democrats are far more free to voice what they want than some of the Conservatives are. It’s very important to show the Conservative Party in the country that there is a very active campaign to try to persuade the Chancellor on some of the issues that we would find important. Remember that the Conservatives make up five-sixths of the coalition, not half.”

A Lib Dem spokesman was quoted as saying that while the party recognised that a lot could be done to help businesses, it was “not going to stand by and allow organisations to get the power where they can simply fire at will”.