Poor but Proud Liverpool Clings to Hopes for a Civic Revival : Britain: Economic slide, political warfare has brought decay to the ‘Second City of the Empire.’ New leadership now struggles for change.

One of Europe’s poorest yet proudest cities is struggling to overcome decades of decay, mismanagement and corruption and to pull itself back from the brink of collapse.

Liverpool, once the world’s largest port, is in crisis. Portions of its once-stately parks are buried under mounds of garbage after work stoppages by trash collectors. Other public employees are staging revolving walkouts and occupying municipal buildings to protest cuts in its bloated work force. And last month residents voted in a bitter special election that seemed less about who will represent one parliamentary district than about what kind of city this will be. The winner was a moderate Labor Party candidate, who soundly defeated a far-left rival.

“This is the city that was always just about to make it,” said Michael Parkinson, director of the Urban Studies Center at Liverpool University. “For 15 years, people put things off and refused to face reality. Now they can’t any longer. It’s a bloodletting that has to be gone through.”

The political party in the hot seat is Labor, which has a plurality on the City Council and is bitterly divided between moderates loyal to party leader Neil Kinnock and the radicals he has helped oust from power. Leaders of the Conservative Party claim that Liverpool’s nightmare is, in the words of Cabinet minister Michael Heseltine, “a terrible warning of what would happen if Labor ever came to power” in a national election.

But critics say the blame for Liverpool’s plight extends beyond Labor to a Conservative-run national government that has made sweeping cuts in grants to localities while saddling them with former Prime Minister Margaret Thatcher’s poll tax, an inequitable and ultimately uncollectable revenue system. A recent measure to repeal the poll tax is not scheduled to take effect until next year. Even Britain’s centrist third party, the Liberal Democrats, has played an opportunistic game of shifting alliances at the expense of needed reforms, these critics say.

Although it has fallen faster and further than most, Liverpool is but one of a special breed of old industrial English cities whose decay began under Labor governments of the 1960s and only grew worse during the Thatcher years.

Once feted as “The Second City of the Empire” after London, Liverpool has undergone a long, steep decline shadowing that of industrial and imperial Britain. The end of the cotton trade along with gradual collapse of northwest England’s coal mines and heavy industry reduced the port and the huge businesses that grew up around it--insurance, warehouses, food processing--to a thin shadow of the past.

As the economy shrank, so did the city--from a population of more than 700,000 after World War II to only about 450,000 today. Most who left were middle-class and mobile. Those who stayed were predominantly poor, elderly and unskilled. Male unemployment stands at 22% and, according to a recent study, 40% of residents live below the poverty line.

Alongside the River Mersey, the renovated Albert Dock--a 19th-Century warehouse complex, now converted to museums, shops, offices and apartments--stands as a monument to Liverpool’s fragile hopes. But a few miles inland, the bleak tenements of Sparrow Hall Road--a public housing area of ransacked, boarded-up stores, abandoned apartments, shattered glass and broken burglar alarms--tell a grimmer tale. “This place is an absolute scandal,” said retired factory worker Gerald Horan, a resident there. “The crime, the poor services, the lack of jobs--what do people have to look forward to?”

With private industry pulling out or collapsing, the Corporation of Liverpool, the city’s government, became its main benefactor. More than 31,000 people work for the “Corpy,” making it far and away the largest employer. About 65,000 live in public housing, most of them receiving welfare payments for all or part of their rent. Nonetheless, the city is $40 million behind in rent collection.

The Corpy also has trouble collecting taxes. Nearly one-third of Liverpudlians have not paid last year’s poll tax, a loss of nearly $60 million. Because the city cannot afford to go to court to collect, those who did pay face a $71 per person surcharge this year to offset losses from those who did not.

After years of shaky coalition city governments, Labor came to power in 1983, promising to set Liverpool back on the road to prosperity. But the party’s council majority was dominated by leftists, many of them affiliated with Militant Tendency, a Trotskyite faction born in Walton, the city’s most deprived neighborhood and the district where this month’s election took place.

In control of a major British city for the only time in their history, the militants embarked on an ambitious program of public housing and jobs. They went into debt to build 5,000 apartments, then borrowed more at double-digit rates from Swiss and Japanese financiers when bills came due.

That brought them into confrontation with the Thatcher government, which froze city spending and ousted 47 council members through court action after they refused to adopt a legal budget. Since then, police have launched an investigation into allegations that some left-wing councilmen received payoffs from construction firms and developers that did business with the city. Liverpool has been in a state of open political warfare ever since.

The man now in charge is Harry Rimmer, 63, a lifelong trade unionist and leader of Labor’s beleaguered moderate group. Rimmer has been denounced as a working-class traitor, his one-bedroom apartment set ablaze and his car stolen since he announced plans to cut 1,000 city jobs and raise rents to balance the budget.

“We needed to take these decisions, unpopular though some are,” he says. “Before we can engender confidence outside the city, we need to be seen to be prepared to help ourselves.”

Rimmer has his critics among moderates as well as radicals. Paul Clark, the Liberal Democrat candidate in the parliamentary by-election, says the council has sold off 800 acres of green space in the last three years to help balance the books. He calls it “the sale of the century.”

Trade union leaders, who enjoyed cozy relations with Labor radicals, also are upset.

“We’ve always been prepared to negotiate with the city,” says Tony Gavin, spokesman for the Joint Trade Union Committee, which represents 12 city unions. “But there’s a new group of politicians running this town who have decided that the easiest way to gain votes and to deal with trade unions is to ignore them, treat them with contempt and hope they crumble.”

The council won a major victory early this month when garbage collectors voted to end their slowdown and begin clearing the litter that has choked some side streets and parks. In August, a French firm will begin collecting trash at an annual cost only half what the city has been paying.

In the parliamentary battle, Labor’s candidate in Walton, Peter Kilfoyle, faced a challenge not only from Liberal Democrat Clark and a dark-horse Conservative Party member, but also from a radical who called herself the “real” Labor candidate.

Councilwoman Lesley Mahmoud, 39, an unemployed former teacher suspended from the party last year, blamed Liverpool’s problems on “fat cats who make their money off this city and live in big mansions.” She urged voters not to pay the poll tax and promised, if elected, to “take over the banks and finance companies that are bleeding people dry.”

But final results showed Kilfoyle winning with 53% to 36% for Clark and only 7% for Mahmoud. A recent survey had indicated that most voters held the militants at least partly responsible for the economic woes.

“If we can keep up the momentum, I’m quite sure we are going to turn the corner as a city,” says Rimmer. “In some ways, Liverpool has been too remarkable to survive. We need to get on with it and become ordinary again.”