Liverpool Council initially won concessions and money from the Conservative government and there was a growing national campaign across left-wing councils. Labour refused to back its own councils against Thatcher and the start of the decades-long squeeze on local autonomy went into full swing.
This is yet another reason why backing the Labour right is a hiding to nothing, not a reason to concede eternal defeat to Westminster.
Whenever local government cuts come up, Militant in Liverpool are bought up as an example of what councils can do, but since 1985 a number of laws have been bought in to prevent that situation arising again.
The Local Government Finance Act 1988 created a legal duty for the council's Chief Finance Officer to report if there is likely to be an unbalanced budget.
The Local Government Finance Act 1992 created a legal duty for Councils to set a balanced budget and set dates for when the budget must be announced.
The Local Government Act 1999 meant a failure to set a balanced budget gave the Secretary of State powers to intervene, setting their own budget for the council, appointing Commissioners who can dismiss any statutory position (such as the Cheif Finance Officer) from within the Council and making Councillors personally liable for costs of setting an unlawful budget.
If a council was to deliberately set an unbalanced budget now they would be taken over by central government comissioners who would force them to balance their budget, probably by selling off council assets and forcing cuts, and Councillors could be made personally bankrupt having been charged with malfeasance and misconduct in public office.
Militant wouldn't have stood a chance of success under the current legal framework. Local Councils are powerless to do anything other than stick to their budgets. Which is something George Osborne was well aware of when he piled austerity cuts onto local councils, knowing perfectly well that a lot of the damage caused by austerity would be blamed on local councils rather than central government.
None of which excuses Labour Councillors from being useless shits who meekly went along with it all and especially Ed Milliband's Labour party for accepting the Tory lie that the 2008 financial crash and its consequences were somehow all the fault of Labour's overspending and accepting the austerity that continues to blight the country.