Dawn Butler has spoken approvingly about Labour’s controversial former Militant wing, saying that when it came to austerity it was “better to break the law than break the poor”.

In the early 1980s, some Labour councillors deliberately set council budgets in excess of the limits imposed by central government.

The tactic was condemned at the 1985 party conference, where then leader Neil Kinnock denounced “the grotesque chaos of a Labour council – a Labour council – hiring taxis to scuttle round a city handing out redundancy notices to its own workers”.

His intervention was a key moment in the drive to break the far-left Militant group’s hold over parts of the party, which ended with the expulsion of figures including Liverpool council’s deputy leader Derek Hatton.

Speaking at the party’s women’s conference, Butler said: “Conference, we are in Liverpool where over 30 years ago the council stood up to Thatcher and said – better to break the law than break the poor.”

She called on the party to stand firm against cuts to domestic violence refuges, which she described as a “lifeline to the most vulnerable”, ahead of the launch of Labour’s annual conference on Sunday.

Butler said 86% of the cuts had “fallen on the shoulders of women – your shoulders – and now is time for the many to rise up”. She went on to praise Labour councillors fighting against austerity.

Butler’s remarks courted controversy. Richard Angell, the director of Progress, Labour’s centre-left movement, said: “Dawn Butler’s speech is like a lesson from the Ken Livingstone academy for revisionist history. The Militant Tendency did break the law, left the bills to be picked up by the poor and kept the Tories in power for 12 years more.

“Labour should look up the local government leaders of today who deliver socialism, not those from 30 years ago who discredited socialism.‬”

Glenys Thornton, the shadow Lords health minister and a former equalities minister, tweeted:

Great to be at Women’s conference, but am surprised that @DawnButlerBrent has just praised a Liverpool Council in the past that of Derek Hatton who issued redundancy notices to their own public sector employees, and failed to protect services too! — Glenys Thornton (@GlenysThornton) September 22, 2018

In 2015, Jeremy Corbyn urged Labour councils not to set illegal budgets in response to local government cuts.

Brandon Lewis MP, the Conservative party chairman, said: “This is the sorry state of Labour today: shadow cabinet members praising the hard-left militants of the 1980s. Militant-controlled Liverpool of the 1980s boasted it was better to ‘break the law, than break the poor’, but ran out of money and was forced to sack its own workers.

“As Neil Kinnock said himself at the time: you can’t play politics with people’s jobs and people’s homes and people’s services. Labour has learnt nothing from the past and would take the country back to bankruptcy, job losses and worse public services.”

A Labour party spokesperson said: “The point Dawn was making was that, like the Thatcher government of the 1980s, this Tory government has prioritised tax cuts for the rich while cutting services like women’s refuges that save lives and keep women safe. Labour will invest in our communities to rebuild Britain for the many not the few.”

During the speech, Butler announced Labour’s plans to introduce 10 days’ paid leave for domestic violence victims. She said: “This crucial time will allow women and men to leave their abusive partners safely [and] get the help, protection and support they need knowing their livelihood is secure.”

She pointed to new employment laws introduced in the Philippines, Australia and New Zealand that granted victims the right to paid leave.

She also announced that a Labour government would “acknowledge intersectionality”. She said: “The Conservatives have had seven different equality ministers tagged on to four different departments and a budget that’s almost been halved.

“This proves the Tories are not taking equalities seriously.”

She said intersectionality was “about how different layers of discrimination interact with each other. For example, our laws do not recognise the fact that black women can be discriminated against because they are both black and a woman; or a woman being discriminated against because of her age and gender; or disability and gender.”

Labour want to change that and amend section 14 of the Equality Act, “so people can bring forward cases on multiple grounds of discrimination”, she told the conference.