Secret documents from the Thatcher era reveal a top aide to the prime minister advised her to put Liverpool into a state of "managed decline".
The files that detail cabinet discussions following the 1981 Toxteth riots were released by the National Archives after the 30 year-rule expired.
Then-chancellor Sir Geoffrey Howe, himself a former Merseyside MP, thought that rebuilding Liverpool 8 and injecting regeneration into the city would be a waste of money.
He told Mrs Thatcher: "We do not want to find ourselves concentrating all the limited cash that may have to be made available into Liverpool and have nothing left for possibly more promising areas such as the West Midlands or, even, the North East.
"It would be even more regrettable if some of the brighter ideas for renewing economic activity were to be sown only on relatively stony ground on the banks of the Mersey.
"I cannot help feeling that the option of managed decline is one which we should not forget altogether.
"We must not expend all our limited resources in trying to make water flow uphill."
The remarks by Sir Howe were potentially explosive in Liverpool, at the time a volatile place following the arrest of Leroy Alphonse Cooper on 3rd July 1981 in Toxteth.
He warned the prime minister: "This is not a term for use, even privately. It is much too negative."
The riots continued for eight days and cars and derelict building burned as protesters clashed with police.
Over 450 officers were injured.
Many believe the riots were racially motivated due to the lack of integration of black people into Merseyside Police and mostly-white communities in the city.
Michael Heseltine was dispatched to Toxteth during the violence and reported back to the prime minister with a damaging assessment of the police.
He said: "They were were not acting in a racialist fashion. They treated all suspects in a brutal and arrogant manner."
Lord Howe has defended his position by saying the newly-released documents do not accurately reflect his conversations.
He said on BBC Radio4: "I don't recall how that argument got into the discussion at all.
"It certainly doesn't sound very considerate.
"As a former Merseyside Member of Parliament, I am surprised to find myself ever having argued quite as I am quoted to have done on Liverpool."
Larry Harding, Wirral around 4 months, 3 weeks ago