Britain’s big cities are dragging the country down instead of driving economic growth, Business Secretary Vince Cable has warned.

While major cities in countries such as Germany are centres of prosperity, those in the UK outside London “are lagging behind the rest of the country and have a lot of social problems”, he said.

But the Government’s plans to decentralise power down to councils and local enterprise partnerships were designed to transform the fortunes of Britain’s great cities, he insisted.

Dr Cable, one of the most senior Liberal Democrat members of the government, made the comments as he spoke to the Birmingham Post at Westminster.

In a wide-ranging discussion, the Business Secretary said plans for a high speed rail line between London and Birmingham would go ahead despite opposition – and claimed that critics of the scheme were loud but did not represent public opinion.

He revealed he had got over his initial scepticism about local enterprise partnerships, the bodies set up to drive economic growth, and predicted they would become more powerful and important as years went by.

Dr Cable also appeared to express scepticism about Government plans to introduce regional pay settlements across the public sector.

The controversial new pay deal would mean public sector workers receiving different salaries for the same job in different parts of the country, an idea which is staunchly opposed by unions.

But he said: “I do recognise the practical difficulties and it’s a subject we’ll have to approach with very great care.”

Dr Cable will be in Birmingham to meet business leaders next week.

And getting out of London to learn how life is treating employers in the rest of the country is an essential part of the job, according to the Business Secretary – because he is relying on them to get the economy moving again.

The Government’s economic policy was to “rebalance” the economy, he said: “What I mean is a shift from consumption towards investment, from Government spending and private consumption financed by debt towards investment and business investment, and also a shift of resources in to trading activities, particularly exports, and particularly exports to emerging markets.”

He added: “I think implicit in that is an attempt to rebalance the British economy away from an over-dependence on London and the south east. If we are successful in encouraging manufacturing and exports, we will go some way to achieve that.”

But important as the nation’s “regional centres” are, they are currently underperforming, he warned.

“There is quite a strong contrast between Britain and continental Europe, where the cities in general out perform the rest of the economy, some of them spectacularly so.

“Whereas in the UK, cities languish behind the rest of the economy and have their concentration of problems rather than growth potential.

“What we’ve somehow acquired in the UK are cities which, rather than being growth drivers, which they are in for example Germany, they are lagging behind the rest of the country and have a lot of social problems.

“We’ve got to try to turn that round, and that’s what Greg Clark and his team are trying to address, by giving cities more decision-making and more resources were appropriate, getting their infrastructure working, getting training going.”

Greg Clark is the Local Government Minister currently negotiating with cities over proposals to devolve power from central government to a more local level.

Mr Clark is also overseeing referendums in cities such as Birmingham and Coventry for the creation of city mayors. But while Conservative ministers back mayors, Dr Cable, like his Lib Dem colleague Nick Clegg, is more sceptical.

“Lib Dems were never very keen on elected mayors – that’s our broad political approach. But we are practical people and where there are mayoral elections we will compete for them.