According to the Guardian, elements of Labour are trying to revive another of their party’s 1980s greatest hits: far-left local government rebellion.

With council finances under pressure, hard left activists are calling for local authorities to set so-called “needs based” budgets, which spend whatever money the council feels needs spending without reference to how much money the council actually has.

Quoting the Socialist Party (formerly Militant), the paper reveals that Momentum, Jeremy Corbyn’s party membership militia, are planning a conference in Bristol to oppose budget cuts, and that some branches have spoken up in favour of illegal budgets.

Activists apparently plan to write “to every Labour and Green councillor and candidate, demanding that they refuse to comply with any cuts budgets.”

Yet despite the fact that Corbyn’s office has, in the Guardian’s words, “discussed various forms of defiance strategy with council leaders”, a return to 1980s-style insurrection seems to be beyond the pale even for him.

The Labour leader, in a letter co-signed by John McDonnell, his Mao-spouting Shadow Chancellor, has reportedly had to point out that legislation passed by the Conservatives and New Labour in the 1990s.

As a result, an illegal budget would simply mean “either council officers or, worse still, Tory ministers deciding council spending priorities”, he adds.

The struggle between Momentum and Labour’s local government wing could prove pivotal in determining the depth and duration of the Corbyn revolution.

Until now local government has provided a bastion for moderate, practically-minded Labour politicians, and is viewed by parts of the ancien régime as the staging ground for their fightback.

It contains all the party’s most senior holders of elected office outside Wales, many of whom – such as Sir Richard Leese in Manchester – are actively collaborating with the Chancellor’s devolution agenda.

Such figures were paying little heed to Labour HQ when Ed Miliband was in charge, and are scarcely more likely to cooperate with Corbyn.

Just as with the Parliamentary Labour Party, therefore, a confrontation between Labour’s local government wing and the hard left seems, from the latter’s position, logical and inevitable.

As our own Mark Wallace reported when he attended a local Momentum meeting, plans to force out councillors linked to the Blairite group Progress are being openly discussed in Lambeth.

Meanwhile Ted Knight, the former leader of Lambeth council who set an illegal budget in 1984, wa revealed this week to have joined Momentum.

Can they prevail? It’s difficult to tell without deep knowledge of the world of Labour local government, but suffice to say it seems more likely in places like Lambeth than Sir Richard’s Manchester fiefdom.

Indeed, one person who will be fervently hoping this is the case is George Osborne. The Chancellor has invested a huge amount of time and political capital in his Northern Powerhouse project, and worked hard to win the trust and respect of England’s major Opposition-controlled councils.

He’ll remember that it was in order to curb the actions of out-of-control socialist militants that Margaret Thatcher pursued her centralisation agenda, which ended up giving New Labour a free hand to impose devolution settlements of their own when they came to power.

Osborne does not want to have to start seizing power back from local government, which leaves him in the unusual position of hoping, for once, that Labour members take Corbyn’s advice and obey the law whilst Labour moderates hold the thin red line in city hall.