This whole issue has been discussed here at great length before - and dennisr's contributions are particularly worth reading, given that he was in Militant in Liverpool at the time. Basically Liverpool Council fought Thatcher's government. When all the other "left" councils backed down one by one, they refused to do so. They won some very significant concessions which amongst other things mean that to this tens of thousands of working class people have quality council homes. Throughout the entire period when Militant played a leading role in the Liverpool Labour Party, the Labour vote went up in every single election in the city - at a time when the Labour vote was in real trouble nationally. But eventually they were defeated by the combined forces of the Conservative government, the local and national media, the Courts and perhaps most importantly the national leadership of the Labour Party.
The Labour leadership took the decision that it was worth destroying their own party on Merseyside in order to break Militant in the city, and that's exactly what they did. The new-model right wing Labour Party has never reached anything like the support which the Militant led council developed.
But we should be clear, they may have gutted the Labour Party but they did succeed in breaking Militant's influence and seperating it from it's base in the local Labour movement. The combination of these defeats both inside andhad a demoralising effect on Militant in the city, particularly in the context of defeat after defeat for the workers movement nationally.
People dropped away from the organisation gradually. At the same time much of the local leadership slowly began to develop a strange mixture of reformist ideas, including if I recall correctly some weird stuff about how the internet had changed capitalism, and there was eventually a split with an organisation called the Merseyside Socialists which is now defunct (Lesley Mahmood is about the only person from that split whose name I still regularly see about). Militant Labour and the Socialist Party hit their lowest ebb in the city at the end of the 1990s, when the organisation was very weak indeed. Over the last few years though it has grown significantly with both new people and a significant layer of members from the 1980s getting active again - including a number of the former councillors and trade unionists.
Overall the period is well worth reading about to show both what can and importantly what can't be achieved by a local council. The list of improvements fought for and won by the Council is extremely impressive - including as articul8 pointed out the last major council house building programme in Britain. On the other hand, it was eventually defeated and defeated thoroughly.
Another thread on the same subject:
http://www.urban75.net/vbulletin/showthread.php?t=84117&page=1&pp=25&highlight=liverpool+militant
Coincidentally, there will be a meeting on this very subject at Socialism 2005 in London this Sunday. Tony Mulhearn one of the surcharged Councillors and the President of Liverpool District Labour Party during the period will be speaking. If anyone here is interested they should go along, listen and have their say.
Socialism 2005 site:
http://www.socialism2005.net
Socialism 2005 thread:
http://www.urban75.net/vbulletin/showthread.php?t=138400