Death by a thousand cuts: Why Liverpool's enthusiasm for the Big Society has been crushed

Far from Westminster, policies are brought into sharp focus.

I'm a hairdresser really" Mary explains, her hand automatically going up to smooth her blonde hair as she talks, "but I volunteer here one day a week and I just love it. I've learnt so much being here that now I spend all my time telling my friends "you've got to volunteer."

Well-spoken, smartly dressed and warm, Mary is today running the reception desk at Liverpool city centre's Citizens' Advice Bureau. Like all other CABs, it is locally managed, uses large numbers of volunteers alongside paid specialist staff, and provides a vital link between local and national government, the courts, social services and the third sector. Mary's role, then, is at first glance the very epitome of what David Cameron calls the Big Society – individuals giving their time and energy to help others in their neighbourhood without the state having to get involved.

On the other side of Mary's reception desk, all the seats in the waiting room are taken. Most eyes are downcast. "You've come at a quiet time," she says. "Usually it's standing room only." There has been, reports Janet Ward, the bureau's manager, a huge increase of late in demand for CAB services because of the changed economic climate. Around 10,000 people have passed through this waiting room in the past 12 months, with the team of advisors beyond helping them tackle £11.4 million in personal debts, double the figure of just a couple of years ago.

And yet, at this time of unprecedented need, this over-stretched CAB is about to make redundant three of its debt counsellors, all of them funded by the Government's Financial Inclusion Fund, which Vince Cable's business department has axed. "We are losing the cornerstone of our advice service," Ward says matter-of-factly, though just occasionally the frustration that she must feel at being caught between burgeoning demand and dwindling central government support rises to the surface. If Whitehall really wanted to show that the Big Society is more than "fine-sounding words", she suggests, a quick and effective practical way would be to reprieve the Financial Inclusion Fund which, all evaluations concur, has been cost-effective in helping excluded individuals, without bank accounts, to sort themselves out.

Further down the line for the CAB, there is the ongoing Ministry of Justice review of funding of legal services that, in the current climate of cuts, may well deal a hammer blow to the Liverpool bureau.

"We opened up here the day after war broke out in September 1939," Ward says, "but our future right now is more precarious than it has ever been. The way things are going we may well end up with half a money adviser, half a legal adviser, and our volunteers, and you can't run an effective service on that. The Big Society will just have to go on without us."

In this paper yesterday, Phillip Blond argued that "the Big Society has nothing to do with cuts". He needs to spend some time in Liverpool. Further up Dale Street from the CAB, in a magnificent 1930s art deco building, is Liverpool Charity and Voluntary Services, celebrating its 102nd anniversary as an organisation promoting precisely the sort of philanthropy, localism and community activism that Cameron argues for so passionately under the banner of the Big Society. Yet it is about to lose two-thirds of its funding, and two -thirds of its staff of 60.

"The irony is that we are a Big Society organisation," reflects Alan Lewis, its chief executive, "and we have been for decades, when different governments called the same idea by different names. And, as a non-party political organisation, we have worked with them all, and will continue to do so, but you cannot talk convincingly about a Big Society at the same time as make cuts on the scale this government is now making them.

When David Cameron first mentioned the Big Society in 2005, he was assuming stable levels of public expenditure, but looking to the future, at how you looked after an ageing population, for instance, but that context has now changed dramatically. When your granny needs help going to bed on a Friday night, but the service that provides that help has been cut, all this talk of encouraging volunteers, cutting red tape and digital inclusion that surrounds the Big Society idea counts for absolutely nothing."

It was in July 2010 that David Cameron came to Liverpool's Hope University to give a keynote speech on the Big Society. "Imagine parents setting up great new schools, charities rehabilitating offenders, neighbourhoods taking over local services," he told his audience, "and you're imaging the Big Society... And that change is starting right here in Liverpool."

The city – building on the international success of its 2008 tenure as European City of Culture, and enjoying a sustained economic revival unknown since its distant heyday in the late Victorian era as the "port of Empire" – had willingly agreed to be one of four "laboratories" (later changed by Cameron's image-makers to "vanguards") of the Big Society. "After all we've always been good at the Big Society here," says the leader of the Labour-controlled council, Joe Anderson, who was there that day. "It was a Liverpool man [Thomas Agnew in 1883] who set up the Society for the Prevention of Cruelty to Children here and it spread all around the country. So we were as keen as anyone to be involved."

Yet earlier this month Anderson made headlines when he wrote, more in sorrow than anger, to the Prime Minister to say that Liverpool was pulling out of the whole scheme. "How can the city council support the Big Society and its aim to help communities do more for themselves when we will have to cut the lifelines to hundreds of these vital and worthwhile groups?" Facing a cut in grant from central government of £91m this coming year, and £50m the following year, Anderson has had to spend the last few months working with all parties on the council (there is not a single Tory among them – "they're as rare as rocking-horse shit here," he remarks) to find those £91m in savings principally out of the £400m tranche of the budget that is not ring-fenced.

Sitting in his office in the Municipal Buildings, a photograph behind him of the Mersey ferry at the iconic Pier Head, he waves a wad of printouts marked "Confidential".

"Here are the cuts we have agreed and will announce later this week. Every voluntary organisation that we support in the city is facing a cut and some an end to funding. I have shed tears – literally shed tears – over this. And it is not just me. These are cuts we are being forced to make.

"If we refuse and set an illegal budget, the district auditor would be in here running the council in a matter of weeks. And we are not going to risk everything that's been achieved in Liverpool by doing that and allowing a re-run of the 1980s."

He is referring to the time, with Margaret Thatcher imposing cuts on local government that were mild in comparison to what is going on today, when Liverpool's Labour-controlled city council was in the hands of the Militant Tendency. It decided that it would take on and defeat the Thatcher government and its tough economic gospel but this act of folly ended in farce and humiliation. The sight of thousands of council workers having their dismissal notices delivered by taxi seemed to confirm to outside investors that Liverpool was not a place where they could do business. It has taken 25 years for the city to recover and Anderson is acutely aware of that.

Yet the ghost of Militant and its leader, Derek Hatton, has been invoked to paint the council's decision to pull out of the Big Society as those chippy Scousers causing trouble again. And not by Tory ministers from London, angry at the damage done to their flagship scheme, but by someone as much a part of the city's folklore as Cilla, Tarby, Macca and Doddy, the television producer and creator of Brookside, Phil Redmond. He has also lately been the government's Big Society "tsar" for Merseyside.

Accusing the Labour council of "throwing its teddy out of the pram," in an angry response to the decision to withdraw from the scheme, he glibly invoked the "electoral tradition that Liverpool will be at odds with whoever is in the national government" and specified "the Militant-Thatcher confrontation of the 1980s".

The reaction to his remarks in the city – that Redmond himself likes to characterise as "a big Scouse debating society" – has, it is fair to say, been overwhelmingly hostile, but Joe Anderson is measured in his response. "Phil's a nice guy but his idea of the Big Society is volunteers keeping local museums open until 11 o'clock at night when in some parts of Speke and north Liverpool we have people living in squalor and the worst deprivation in England."

So where has the Big Society gone wrong in this vanguard city? What changed Anderson's mind between July when he shared a platform with David Cameron and now? "For three months after that speech nothing at all happened. We were in the vanguard, but we heard nothing. Then I got a visit from Andrew Stunell [the Liberal Democrat minister in the Department of Communities and Local Government]. He sat in this room and told me there was no money for the Big Society, but he could help cut out red tape and bureaucracy that was getting in the way of it achieving things. So I allocated council officers and we came up with some proposals about how we could make it work."

One of these ideas concerned 11,500 boarded-up Victorian terraced houses in the Anfield, Picton, Granby and Princes Park areas of the city. These had been part of a £127m, 15-year renewal programme agreed with the previous Labour government, since axed by the Coalition, which handed responsibility for these derelict two-up, two-downs back to the council.

"We had been left high and dry but we have 17,500 on our housing waiting list," says Anderson, "so we worked with community groups, local social landlords and local businesses to come with a proposal to retro-fit some of the properties and bring them back into use. It was very Big Society. All we asked was that the VAT charged on retro-fitting, but not on new builds, be waived on this occasion. And we waited and we waited for a reply, and we are still waiting. But while we were waiting, I was being asked to deliver all these cuts to be very people the Big Society is meant to help. It doesn't make sense. Someone had to say that the Big Society is "The Emperor's New Clothes", and no one else had the balls until we did."

Liverpool's withdrawal was swiftly followed by a damning critique by Dame Elisabeth Hoodless, head of Community Service Volunteers for 36 years on how the cuts were "destroying" volunteering. Her remarks are echoed by most voluntary organisations working in Liverpool. They are deeply sceptical of the Big Society rhetoric.

Gill Bainbridge runs Merseyside Youth Association which has a drop-in centre, The Door, right next to the city's brand new £1bn shopping and leisure complex, Liverpool One. It offers training, support and encouragement for around 9,000 predominantly 11-18 year olds a year. Bainbridge was also at Cameron's Big Society launch in Liverpool last July. "I had to sit on my hands because it made me so angry," she admits, "and I didn't want to be the one who spoilt the party. He is just stealing the language of the voluntary sector, about empowerment and enablement."

Her organisation is already feeling the squeeze, with cuts to the money it gets from other public sector funding bodies, and is heavily dependent on the city council to cover staff costs. "The Big Society talks a lot about using volunteers, not paid staff, and we already have a lot of volunteers here, but you can't have one without the other" Bainbridge explains. "Volunteers shouldn't be seen as a cheap option instead of professional workers, and if you work, as we do, with needy teenagers, it isn't always appropriate to put volunteers in those situations, especially without the right training, support and supervision. If you want to deliver a highquality, effective programme, you need consistency. Our experience has been some volunteers can be very willing, but then when something else comes up, they let you down."

Like many working at the sharp end of the charitable sector, Bainbridge doubts the capacity of the Big Society project to engage properly with the complex needs that present themselves at The Door every day. "As an idea, it is full of contradictions. It talks about doing things locally, but then also talks about economies of scale, which require bigger, national organisations not local ones. It talks about payment by results, but that means you only get paid when you have delivered and most small, community-based organisations don't have the reserves to operate that way. And it assumes that there are private funders out there, willing to take the place of public-sector funders, which may be the case in somewhere like London, but our economy here in Liverpool is so vulnerable. We've rebuilt ourselves on retail, leisure and tourism and those are the first things to be affected when money is tight."

Back at the CAB after lunch, Mary's waiting room has filled to bursting again. There is just so much need out there. Since 1945 local unemployment levels in Liverpool have never been less than twice the national average. The city remains top of most league tables for deprivation in England, and yet – according to figures produced by the city council – it has received some of the biggest cuts to its government grant (compared with an increase for Dorset County Council). Already 1,500 redundancies have been announced by the council (out of a workforce of 9,000) and 300-500 posts are to go in the voluntary sector.

Cuts on this scale have human consequences and they are sitting here hoping the CAB can help. Their presence gives the lie to Phillip Blond's denial that there is any link between cuts and his pet project. The headline on a newspaper clipping about threats to the CAB budget on the noticeboard in front of where the crowd sits patiently, sums up the attitude of many in Liverpool: "Big Society sham".