It is little more than a mile from Everton Brow to the shiny new conference hall on the Liverpool dockside where the Liberal Democrats are holding their annual conference. But the two places are a world apart. Those Liberal Democrats who are preening themselves that this is the party's first conference in government for 65 years might do well to make the short journey. If they did, they would discover the consequences of their decision to renege on their manifesto pledge not to back public-spending cuts as hard or as fast as Conservative ministers have decreed.

They might meet Danny Vaughan, a 29-year-old who is doing community work under a scheme called Future Jobs. He is a tall, taciturn young man who, until he joined the project, had been on the dole for six months after getting laid off from a labouring job. "I tried to get another but there's just no work out there," he tells me.

He is standing in the foyer of the West Everton Community Centre – known to everyone locally as "The Wecc", pronounced with a guttural Scouse click on the final consonant. He is talking to Ann Roach, who is the chair of the centre and also the supervisor of the Future Jobs scheme. "Danny is so keen he comes in at 7.30 though he's not supposed to start till 9am," she says.

His job is to help old people locally with their cleaning, decorating and other odd jobs. "Danny is the new Yosser Hughes," Ann says referring to the character from The Boys from the Blackstuff, the TV drama from the 1980s, who became famous for his catchphrase, "Gizza job". "I'll do any job. I'll go down the sewer and sort the hard shite from the soft shite if you want," says Mr Vaughan eloquently, "so long as it gives me a job."

The task he has been given is more mundane but far more useful. "Yesterday, we got a call from an 80-year-old lady whose house was full of wasps," he says. "I went in and killed 50 then we got someone in from the council to take the nest away. There are lots of old folk in the community who need help, who are stuck in their house and never go out, and where no one normally ever knocks on the door."

But the Future Jobs scheme is to be axed in the Coalition cuts. It is by no means all. Liverpool City Council has been told its Area-Based Grant budget – the money local councils get from central government – is being cut by £9.28m for the current financial year. And that is before the Coalition cuts proper start next year.

Already being axed are funds for a project to help unemployed people in the most deprived areas of the city set up their own businesses. A project to speed the rehousing of people made homeless by mortgage repossessions will go. Free sports and recreational facilities for young people have already gone. Free fruit and vegetables for primary school children have been reduced. A keep-fit programme to help the elderly stay active has been cut, which will almost certainly send some of them into residential care earlier than need be the case.

Quit Smoking and Cut Down on Booze projects have been cut. So have handyman services available to help the old and frail cope. Grants available for families with children with Special Educational Needs have been cut. So has a scheme to provide free smoke alarms for the old and vulnerable.

The scale of the cuts has prompted several Liberal Democrat councillors in the Merseyside region to defect from the party. One, in Liverpool itself, is Ian Jobling. "I was a Lib Dem representative on the Merseyside Police Authority," he tells me. "Just two weeks into the Coalition, we received an instruction to cut £4m from the current in-year budget. I was shocked. This was in breach of the Lib Dem manifesto which had said no cuts before 2011-12 because earlier cuts would harm the recovery and cost jobs. Indeed, we'd said we'd put 3,000 extra police on the beat with the money we saved from scrapping ID cards. And now here we were faced with having to cut 70 officers on Merseyside."

As the weeks passed, the extent of his party's turnaround on cuts became evident. Liverpool lost £350m for 26 new schools when Michael Gove slashed the Building Schools For The Future programme. "Then the Area-Based Grant was given an immediate £10m cut which will hit schemes to help older people and plans for new street lights in crime hotspots," Mr Jobling says. "People voted for us on our manifesto and then we got into bed with the Tories and junked it. I mulled on it for a few months. Labour had taken control of the council in May and had begun to do rather a good job so last month I decided to join them."

It was not him who defected, he feels, but the Liberal Democrats from their pledges.

Back at the Wecc, two men in their late 20s have arrived, wearing hard hats and fluorescent yellow jackets. They are the proof that the doomed Future Jobs scheme really works. Dean Powell and Darren Jones were given placements with a local construction firm, Conlon, by the scheme. They did so well that they have now both been employed by the company.

"I'd been on the dole for years," says Mr Powell. "I'm a single parent. I wanted to get a job to show my seven-year-old that life on the dole is no good and that you need a job. I came down here to the Ways to Work project and they helped me with my reading and writing twice a week. Then Future Jobs got me on to Conlon's."

Sitting next to him is the firm's site manager, Gordon MacKenzie. "We weren't looking for the best-qualified but for local lads who need a bit of a lift," he says, proud of his firm's involvement with the local community. "As the time has passed, they have become much more focused and settled." Mr Powell adds: "I've got my construction work certificates and an NVQ, and I've learned flagging and paving and concreting which are all skills for the future. I was going to get a fork-lift qualification but the funding has just been axed."

That is not all that is to go. The next cohort of jobless people entering the Future Jobs scheme in March will be the last. "It's a tragedy," says Jane Corbett, the area's Labour councillor who has for two decades been a human dynamo in the regeneration of West Everton where unemployment is 44 per cent.

"The scheme has been rooted in the community and local people have felt treated with dignity and respect in a way which they don't down at the JobCentre. These people are not workshy; there is just no work."

It is noticeable, she observes tartly, that the Area-Based Grant has not been cut whatsoever in local authorities in the constituencies of David Cameron, Michael Gove and Eric Pickles. She is the lead councillor on education for Liverpool and has written to the Education Secretary to say that if he will find just half of the money for rebuilding the city's schools local people will raise the rest. She has yet to receive a reply.

Nor is there much faith in the Coalition's insistence that the private sector will step in to create jobs to replace those thrown out of work by the cuts. "The idea that the private sector will provide the jobs has no logic in it," says Conlon's Mr MacKenzie. "Axing the building of schools will make the private sector contract too.

"It's like eating your seed corn. It's a travesty. National politicians just don't understand what it's like on the ground. They haven't put enough thought into where the axe should fall. I'm a Scot but it's obvious to me that a place like this needs special attention." A group of Future Jobs workers have gathered in the Wecc offices. "I don't know what will happen when I'm finished here in December," says Amy Bebb. "There are just no jobs out there." She has had 24 part-time jobs since she was 16 so she knows how to work when it is available. She was been doing youth community work on the scheme. "The experience here has been invaluable," she says. "It has rebuilt my confidence." She had hoped to train as a drugs counsellor. "God knows they're needed enough round here. But it doesn't look likely to happen for me now."

So what will? She is silent. "It'll be back to JobCentrePlus," says one of her colleagues, Dave Pattie. At 29, he had been on the dole for 10 months. "I did all kinds of things before, labouring, bar work, window cleaning. But there's none of that available now. They even want qualifications – health and safety – to do window-cleaning. I have done everything the dole office have suggested to boost my chances but nothing has come of it."

The group is withering about the service provided by JobCentrePlus. "Here at the Wecc it's different. You feel valued, you're appreciated and it's great at the end of the week to know that you've earned a wage," Mr Pattie says. "But at the JobCentre you get looked down on as if you're idle or don't want a job. It made me feel angry every time I went in there."

Darren Jones says: "They don't get to know you in the JobCentre. You see a different adviser every time you go in." The staff there expect claimants to go after any job they tell them to, says Jane Corbett. "Even if it's not an appropriate one or they are not ready for it. They just get rejected and that knock people's confidence".

Mr Powell adds: "They're not really interested in helping you. They're only interested in telling you that you haven't filled this form in right and you'll get your money docked. They're aggressive."

There is a palpable sense of glowering impotent indignation among the group as they consider a future blighted by Coalition cuts. "These politicians, have they ever had to struggle to get a real job," explodes Dave Pattie. "Have they ever known what it is like to have only pennies left at the end of the week?"

Ann Roach, who will lose her job too, says: "It feels like a big black hole is about to open up, and as we all fall in they'll throw more and more mud on top of us. They are burying the poor alive." Amy Bebb, in an acid coda, adds: "And then they'll wonder why people turn to crime."