The UK economy is still on life-support despite signs of recovery, business secretary Vince Cable told a conference of council chief executives yesterday.

Referring to the financial crash as a ‘massive heart attack to the economy' he added: ‘We're still connected to the life-support system of virtually zero interest rates and loose monetary policy.

‘We don't know what happens when the life-support system is disconnected.

‘We're dealing with a damaged economy and it will take a long time to get back to normal.'

Mr Cable told the Society of Local Authority Chief Executives conference in York that local government had been ‘emasculated' by successive central governments, that he favoured ‘genuine decentralisation' and one solution was to ‘restore its revenue base'.

But he warned against simply handing existing revenue-raising powers to councils, adding: ‘We've got two bad taxes in council tax and business rates and saying let's hand them back to local government doesn't solve our problem.'

The business secretary said that the rate of participation by 16- to-17-year-olds in education or training varied too much from one council area to another.

While many had 99% rates, Oxfordshire's was 70% while Waltham Forest had no information at all on 20% of its 16- 18-year-olds.