The York-born former Business Secretary told The Yorkshire Post the North’s rail network needs an “overhaul” as it is “terrible deficient and far too slow”.
Speaking ahead of the Lib Dem conference, which begins in Brighton today, Sir Vince also suggested he was in favour of giving Transport of the North (TfN) powers to direct investment in northern infrastructure.
And lifting controls over borrowing would free up cash more quickly to spend on improving railways which have been blighted by delays and overcrowding, “because at the moment Network Rail is being severely rationed in what it can actually do”.
“The North of England has been starved of capital,” he added.
Sir Vince said he had argued unsuccessfully during the years of Coalition Government for controls on borrowing to be lifted during a period of historically low interest rates.
And he went on: “If you are giving them (TfN) full powers, and I can see the point of that, you’ve got to lift the borrowing limits.
“If I can draw a parallel with housing, one of the reasons houses aren’t being built is that local councils don’t have the freedom to get on and do it and Government controls them.
“There’s no point setting up a transport authority unless they have borrowing powers.”
Sir Vince said the Lib Dems would be “making a big thing” about the “neglect” of northern infrastructure and “the fact that the Northern Powerhouse is being sidelined and the Government is not listening”.
He backed the idea of a One Yorkshire devolution deal to bring powers and money to the region under one mayor, which currently has the support of 18 out of 20 of the region’s council leaders.
But he warned northern leaders they have to “get on with it”.
He said: “My instincts are for the traditional Yorkshire, which included Hull, Middlesbrough, things that have been lost to other city regions.”
Risking controversy, he went on: “So I’m up for restoring good old Yorkshire, with York as its centre. The principle of One Yorkshire is right, what I have a slight reservation about is we are spending a lot of time and energy reorganising government and frankly we just need to get on and do things.
“I would like government to devolve much more because we’ve become a very centralised country.
“I understand as a Yorkshireman why we want to reconstitute Yorkshire,but providing we’re not spending years reorganising bureaucracies, there’s a danger of that.”
The Lib Dems’ proposals to scrap altogether business rates, which are levied on companies by councils, and replace them with a tax on the value of land would disproportionately help the North, Sir Vince argued.
“Regionally what it means is that in areas of high land values like central London they pay a great deal more and in the North of England they pay a great deal less in most places,” the leader said.
“We’ve done a lot of detailed calculations of the benefits that will accrue, particularly to the more deprived communities to the North of England.”
The Lib Dems have been going backwards in recent years in Yorkshire, with their two MPs in the region falling victim to the “Corbyn surge” in last year’s snap election, with Sir Nick Clegg in Sheffield Hallam one of the highest profile casualties of the vote.
But Sir Vince insisted his party was on the way back in the region, highlighting Hull as a “two party state” where the Lib Dems are “not far behind” Labour, Sheffield as somewhere that is “getting much stronger”, York’s council coalition with the Tories and Harrogate as somewhere that is “coming back to life”.