LIVERPOOL must be turned into a "European-style driver of growth" if the Government's vision for the city is to succeed, Vince Cable has said.

In an interview with the Liverpool Post, the Business Secretary said the economic weakness of Britain's big provincial cities was the biggest challenge to attempts to drag the country out of its slump.

Dr Cable pointed out that, across the rest of Europe, big cities have stronger economies than the rest of their countries – but, in Britain, the depressing reverse was true.

That was why the Coalition's focus was on striking "City Deals" with the likes of Liverpool, to transfer new powers – over welfare-to-work programmes, regeneration schemes and, potentially, road schemes and rail services.

Dr Cable acknowledged that progress so far had not been "spectacularly radical", but added: "The intention is decentralising and I think this will acquire a momentum."

However, he also admitted recovery would be tough, saying: "The idea of the North lagging behind the South and South-East has happened for a very long period of time, and it's not going to be easy to turn that around."

The "City Deal" talks with Liverpool, and England's other seven key cities, are expected to deliver a single "capital pot" – replacing the frustration, for councils, of having to apply separately for projects such as roads and housing.

Councils will also retain increases in business rates – rather than losing them to the Treasury, for redistribution – and, from 2013, be able to borrow on the back of those receipts, to fund key projects. Dr Cable said the Coalition was determined to focus its attention on cities, because that was where 60% of British people lived and because of the "strong contrast with Continental Europe".

He explained: "On Continental Europe, the cities out-perform the rest of the economy – some of them spectacularly so.

"What we have somehow acquired in the UK is cities that – instead of being growth drivers as they are, for example, in Germany – lag behind the rest of the country and have a lot of social problems.

"We have got to try to turn that around, by giving cities more decision-making and resources, getting infrastructure working, getting training going, allowing them to flex their muscles."

Criticising Britain's "very, very, very centralised system of government", Dr Cable harked back to his days as a city councillor, in Glasgow, in the mid-1970s.

He said: "We had real power. Sometimes, we misused it – but we were also quite creative. There was a freedom or local energy to be harnessed in a way that has been knocked out of local government in recent years."