Town hall meetings are rarely brief and certainly never quiet in Liverpool. The one on March 2 was no exception, as the council of the city that ranks as the most deprived local authority in England worked through the finer details of $147 million in cuts to its $647 million annual budget.

Liverpool is at the very heart of the Conservative-led coalition government’s plans to shrink the public sector, reduce welfare to the bare minimum and “reform” Britain’s National Health Service (NHS) by tendering contracts to private companies while firing a whole swath of healthcare personnel. At every point in the life cycle of a “scouser,” Britain’s affectionate nickname for the city’s residents, the government is seeking to slash services, freeze pay and make life immeasurably harder for some of the country’s poorest and most vulnerable people.

Back inside the town hall, petitions are made. Lisa Dempster, speaking for a daycare center in Knotty Ash, an area in the east of the city, told the assembled company, “I’m doing what David Cameron says he wants people to do. I work full-time, and I have done since the age of 16. My family is being penalized by this government from all sides.” Her hands were shaking as she described how her children would no longer receive the bus passes, educational grants or tax credits that would have enabled her to keep them in school.

Four local Sure Start centers, the British version of Head Start, are under threat and likely to close. Dempster was begging the council to leave hers alone. Luciana Berger, a local Labour MP, told me the two centers in her constituency were “much loved and cherished by the communities that use them” and said the number of e-mails and letters she was receiving was “overwhelming,” and mostly concerned with Sure Start. Even from a government that professes to love a small state, at least 80 percent of Liverpool’s funding comes from the government in Westminster. The centralized nature of authority, and its lack of compromise, is the main reason the city has unilaterally pulled out of David Cameron’s “Big Society” program. As Joe Anderson, leader of the Liverpool council, said that night, “We are not ‘in this together,’” echoing the prime minister’s words in the negative.

For Hayley Todd, a mother of two and an aspiring social worker, Sure Start was a lifeline. She talked me through the experience of “walking through those doors as a new mum and being given that support and that confidence” with free classes and social activities for parents. “If that goes, what are new mums going to do now? It’s going back to where there’s nothing,” she said.

Todd was given free childcare under the last government, which allowed her to study at an adult education college. She says she did it because “that’s the mindset Labour gave me. Not only did I want to do it but I wanted to give something back.” Todd is one of many women I meet who joined Labour in the past ten years, at the height of “New Labour” power.

Todd’s children are now school age and would be extremely lucky to find themselves in a comprehensive (equivalent to a US public school) I visited, St. Edmund Arrowsmith’s in Whiston, located about twenty minutes from the city center. The year-old building gleams like a space-age fortress. Teenagers work out in a state-of-the-art gym, design and build products in the workshop and check the times of their next music lesson on large plasma screens. These kids aren’t privileged. Twenty-three percent of them are on free school meals, and there is a dedicated police officer to make liaisons between home and teachers when the pupils end up in court. A spokesman for the school, who did not wish to be named, told me that around $40 million was spent on this building, and the pride of the students as they go about their day is evident. He added that establishments like this would not have anything physical taken away from them but that cuts would come in the form of the extra help that a school with a welfare roll needs. Educational psychologists, attendance liaisons, consultants and teaching support staff had already lost their jobs, and he feared many more would be fired in the coming months.

Daniella, 16, is not so lucky. Her school, St. John Bosco, is literally crumbling. “I can put my hand between the cracks in the walls,” she told me. Last year Michael Gove, the education secretary, canceled the previous government’s Building Schools for the Future program, leaving the construction of new sites in limbo. That is not Daniella’s main concern. Now that she and her peers no longer receive payments provided by the means-tested Education Maintenance Allowance, she tells me, “loads of girls aren’t going to sixth form. They’re really smart, but their mums can’t afford university. You do A levels to get a profession, but what’s the point if you’re not going to university?” A levels, usually academic qualifications that are similar to a high school diploma, are becoming redundant in a city where money is in short supply. “Because the Conservatives have come in now it’s really only the ones who can afford it who are going [to university]. Or they’re getting a part-time job.” As an obviously bright and eloquent teenager, Daniella’s final words to me were particularly depressing: “I don’t even want to go anymore.”

I asked Daniella’s MP, Stephen Twigg, if her opinion is typical. “Some of the specific government-mandated cuts, like the removal of the Education Maintenance Allowance, have a massive impact in Liverpool for obvious reasons,” he said, “because of the levels of economic deprivation. And certainly in terms of my own constituency, in visiting schools and the community college the impact is really, really grim.” This, combined with the tripling of college fees to an estimated $14,600 a year at some institutions and the end of the Aimhigher advisory service, which prepared children from poorer backgrounds for university, will leave its mark on a generation of teenagers.

By the time Daniella has left school, she will emerge into Liverpool’s job market. With an official unemployment rate of 6.7 percent, statistically Liverpool seems stable in relation to the rest of Britain. However, that number refers to those who claim job-seeker’s allowance and ignores those who get other forms of welfare, those who choose not to claim it and those who rely on cash payments for occasional work. In fact, last year the Office of National Statistics found that one in three Liverpool households had no working-age family members with a job. In March the opening of a new chain cafe in the center of town attracted 2,000 applicants for twelve jobs, with pay at just above minimum wage. The government had promised that the private sector would make up for the layoff of 330,000 public sector workers nationwide, but to put this in context, in 2009 39 percent of working-age Liverpudlians were employed in the public sector (primarily by the NHS, in education or as civil servants).

“In a way, we’re going to be more hit by this public sector recession,” Twigg told me in his Westminster office, “and that isn’t something that is new but it is partly a consequence of deindustrialization in the ’70s and ’80s. A lot of the jobs lost then—and to an extent in the ’90s and the last decade—were replaced by public sector jobs.” Although Liverpool does have a “pretty strong service sector,” Twigg argued, the government’s plans to cut back on pensions and freeze pay will only make working for a government paycheck as unattractive as possible.

Sharon Cody, a pharmacist’s technician in an NHS hospital, told me about the constant stress she is under. “Everyone’s totally disheartened…right through from doctors, nurses, pharmacists, pharmacists’ technicians, even down to ATOs [assistant technical officers] and cleaners. People are leaving our work right now, but they’re not getting replaced. Pay has been frozen for four years.” Managers, especially, were leaving en masse, with three of the four she worked with gone in the past six months alone. “They know what’s coming,” Cody told me. Recent figures estimate that 50,000 NHS workers will lose their jobs, despite the promise that may well become the government’s “Read my lips” moment: “No cuts to frontline services.”

Later that month, I meet shadow chancellor Ed Balls on a visit to the city. From the conversations of recent months it is clear that, materially at least, Labour did much for Liverpool in terms of regeneration and tangible benefits for the worst off, in part as a reward for the city’s consistent voting record: Labour every time. However, the persistence of intergenerational worklessness, child poverty and pockets of crime are still massive problems. “What is really egregious is deep cuts that you do too fast. The only way to do that is to destroy services and undermine the quality service the public receive by laying off staff,” Balls tells me. He says the government is “storing up huge problems for the community” by ignoring mental health provision and the kind of support services that are to be cut in schools like St. Edmund Arrowsmith’s.

Was 2008 a missed opportunity, then, to crack down on reckless behavior in the finance sector and avoid decisions like those taking place in Liverpool’s town hall? “No, to be honest. Everybody around the world, whatever their regulatory structure and the political color of their government, missed this financial crisis. [We] missed seeing it building, missed the need for more effective regulation.” What about afterward? “The right thing to do is to get [the deficit] down in a careful and balanced way, while you keep people in work and while you hold on to these services which are so vital for the future. If you try and go too fast with deficit reduction, the danger is you make your deficit reduction job harder, as well as undermining lots of things that matter for the economy and to the future of our country.”

Balls is, at heart, an economist and a pragmatist. His background is Oxford, Harvard and as a columnist for the Financial Times. This orthodox education served him well as Gordon Brown’s adviser in the last Labour government, but he doesn’t seem to offer anything radically at odds with the austerity mantra of today’s Conservative-led coalition. He is also in an awkward position as a key member of the team that freed the Bank of England from government control and encouraged deregulation. His responses to local problems are pure Labour: social justice, protection of public workers and a veneer of support for working-class people in difficult situations. However, his reaction to the suggestion that his party might have been too soft on banks is pure Labour too—New Labour. Balls wants to please Liverpool and the corporations whose disregard for its people caused their current predicament. After thirteen years of having their cake and eating it, Labour must learn that the two need very different things.