National Archive papers released today show Margaret Thatcher was advised not to invest in Liverpool after riots in 1981 - as well as proving the Iron Lady's tight grip on her home improvement budget.

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Senior ministers told the former prime minister that Liverpool would be best left alone to "managed decline" and that pouring money into the "stony ground" of Merseyside would be a waste of money.

The decline of industry in the late 1970s led to high unemployment in Liverpool and social unrest eventually broke out, resulting in some of the worst inner city riots of the last century.

Nearly 500 police were injured and at least 70 buildings severely damaged during nine days of violence in the port city.

At the time, some ministers called on the government to regenerate old industrial towns. But according to papers released on Friday by the National Archives, former Chancellor Geoffrey Howe said that the government must not "overcommit scarce resources to Liverpool".

"I cannot help feeling that the option of managed decline is one which we should not forget altogether," Mr Howe wrote in a letter to Mrs Thatcher. "We must not expend all our limited resources in trying to make water flow uphill."

However speaking to the BBC in response to the release of the papers, Mr Howe denied pushing Mrs Thatcher towards the "managed decline" of the city. "I don't recall how that argument got into the discussion at all. It certainly doesn't sound very considerate," he said.

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Frugal finances

Another declassified document released today show that the cost of refurbishing Mrs Thatcher's official London residence, 10 Downing Street, came to £1836, the equivalent of about £7,250 today if adjusted for inflation.

But documents from the time show that the Iron Lady's tight grip on the public purse also applied to her personal budget. She asked that the spending on her home be "as economical as possible" and queried the cost of £19 for an ironing board, saying she would instead buy one herself.

A memo accompanying details of the refurbishment shows some officials' concern over the breakdown of costs - one of Mrs Thatcher's aides wrote that some of the costs were "impossible to believe", to which she replied: "So do I!"

Noting the £209 bill for new plates, she said: "I could use my own crockery".

Today, the prime minister is given a maximum maintenance grant of £30,000 for the refurbishment of their London residence. The Camerons spent the entire grant plus another £34,000 of their own money to refit the more spacious 11 Downing Street, which they chose for their permanent London home.