The former England midfielder and Villa coach told the Birmingham Mail: "There should not be any reason why Gareth should move because we are a big club.
"I have said it for years now that Gareth Barry needs to be playing with players on his level. Hopefully we can bring some players into this football club to keep Gareth with us who are on the level Gareth is.
"That is the only way we will move onwards and upwards.
"This is Gareth's best season. He was outstanding last season, but this season he is head and shoulders above the rest.
"He was absolutely outstanding against Blues, a class above everybody on the pitch.
"We have a chairman with a lot of money and a manager who is up there with the very best there is, in my opinion. If that cannot attract players to the club, I don't know what can.
"And if we can qualify for Europe I'm sure Gareth will stay."