Mersey beat: Ken Grant captured the spirit of Liverpool as it coped with two decades of distress

Much of industrial Britain was blighted in the 1980s and 1990s, but in Liverpool, and across the Mersey in and around Birkenhead, the blight was harsher, the desperation more acute, than just about anywhere else. Margaret Thatcher's free-market economy was of little interest to people who economised by shopping at Paddy's Market, the string of ramshackle stalls on Great Homer Street, a short walk from the docks that had once symbolised Liverpool's thunderous prosperity, and now symbolised its precipitous decline.

The fabled Scouse humour survived, of course. It always does. I remember a joke doing the rounds at the time, about a snotty-nosed kid whose eyes lit up when he saw a chalked sign in Paddy's Market advertising brand-new mopeds for 50p. Breathlessly, he handed over his precious 50p, and was given a brand new mop 'ed. A head for a mop.

Football survived, too. Survived and thrived. For Manchester now, read Liverpool then. For the 1980s at least, the league championship, English football's most glittering prize, was reduced to an exercise of Buggins' turn between Everton and Liverpool.

Yet football brought darkness as well as light. The Toxteth riots of 1981 and the catastrophe of Hillsborough in 1989 book-ended a decade of turbulence unmatched on Merseyside even by the strike-ridden 1970s and, for all the excitement of Beatlemania, the economically challenging 1960s. As Scousers might put it, those years weren't too clever either. But for trial and tribulation, the 1980s stood apart, scarred by violence, crime, poverty, and tragedy. Not just the mortal tragedies of Hillsborough, and Heysel, but also the social tragedy of Militant, the powerful Trotskyite faction on the city council, who presided over what Neil Kinnock famously called 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".

All the same, this was Liverpool, where artistic creativity seems to grow out of cracks in the pavement, keeping pace with the weeds. The decade that enabled Militant to flourish also yielded an explosion of music as great, if not greater, than that of the 1960s. Echo and the Bunnymen, Orchestral Manoeuvres in the Dark, Frankie Goes to Hollywood, Teardrop Explodes and many other bands might have been inspired by the legacy of Lennon and McCartney, but they weren't intimidated by it. And at the same time, the greatest chroniclers of life in Britain's most singular city produced some of their finest work. Was there ever a more corruscatingly powerful television drama, more evocative of a time and a place, than Alan Bleasdale's Boys from the Blackstuff?

And so to Ken Grant, another brilliant though rather less-garlanded observer of life in Liverpool and across the water on the Wirral. The photographs shown here, which will be exhibited for the first time at next month's k Format International Photography Exhibition, show Grant's wonderfully keen eye for the humdrum realities of everyday working-class – or more accurately, unemployed – existence in the 1980s and beyond.

Now 46, and a lecturer in documentary photography at the University of Wales (Newport), Grant was born in Liverpool and raised on the Wirral. He worked as a labourer after leaving school, and knew intimately the world he was capturing, which perhaps explains why he did it so brilliantly, with such empathy. As he says now, there were plenty of pictures of vessels being grandly launched from the Cammell Laird shipyard, but his instinct was to chronicle the workers on their tea breaks, or clocking off.

"I like photographing people's circumstances," he says. "Not the celebratory stuff, but the quieter times." It is the instinct of the social documentarian, and Grant deserves to rank alongside the better-known Martin Parr as one of the best. Of the images here, one of the most powerful is that of the pram frame, shrouded in smoke, with a man just about visible in the background. It looks a kind of netherworld – and it was. It was a rubbish tip between the docks in Birkenhead and the M56 motorway, and this man has been burning rubber off cables, so he can sell the bare copper wire, known locally as "slummy". Recycling before it became fashionable.

Another pram looms in the picture of the corner of Vienna Street, where Grant's grandparents lived. It was a Saturday afternoon, and just a few hundred yards to the left, Liverpool were playing at Anfield. Grant took lots of photographs of live football at that time, but here he was rewarded with quiet, litter-strewn streets outside the ground. A deliberate strategy? "No," he says, "it was probably because I couldn't get a ticket."

The Format International Photography Festival runs from 8 March to 7 April in Derby (formatfestival.com)