A changing economy and a changing polity

This chapter looks at the way in which, during the 1970s and 1980s, Liverpool came to the brink of economic and political collapse but managed to pull back from it. In this period the rapid decline of the city's traditional port and manufacturing industries, the election of a Conservative government determined to cut public expenditure, and the peculiarities of the city's social structure and politics combined to throw Liverpool into confrontation and near chaos. The chapter outlines how economic decline and its impact upon social problems led a Militant Tendency controlled Labour council to self-destruct in a very public confrontation with national government. It also shows how that experience alarmed and frightened many inside the city and led to a gradual change in its politics, culture and policies. The period started with confusion and confrontation and ended in a degree of public and political consensus that a new approach to the future of the city was needed. But the consensus was fragile and the city still faced many economic, institutional and political challenges.

There were three major phases of political life in the city in this period, which produced three different local economic strategies. The period 1973–83 witnessed a dramatic escalation of the city's economic problems, combined with a period of political paralysis because none of the city's three political parties could achieve the necessary support to get a majority on the council and develop a coherent response to economic decline. The period 1983–87 was marked by the rise of a powerful Labour majority on the city council which regarded a major public spending programme on the physical infrastructure of its working-class heartland as the only way to regenerate Liverpool's economy. Labour's strategy during this period alienated the Conservative government and the local private sector and ended in political and legal defeat for Labour. After 1987, as the failure of Labour's strategy became apparent to all political actors in the city, an alternative development strategy began to emerge. During this crucial period, changes of political leadership and strategies in the public and private sectors meant that the city's politics began to change from municipal socialism to urban entrepreneurialism.