British history is being destroyed before our eyes – and it has nothing to do with culture wars over statues | John Harris

The People's Story Museum in Edinburgh is a part of the city's cultural fabric whose name says it all: a museum and archive, opened in 1989 and located in the 16th-century Canongate Tolbooth, that takes in just about every aspect of working-class life in the Scottish capital from the 18th century to the late 20th century. Its exhibits include recreations of a bookbinder's workshop, a wartime kitchen and a jail cell; the artefacts it looks after span work, leisure, politics, protest and more.

In a city long since transformed by gentrification and tourism, there is something brilliantly defiant about what the museum does. But after months of erratic opening hours, the People's Story was recently closed without warning, thanks to what one councillor called "staffing pressures and a need to manage expenditure". Last Thursday Labour, Tory and Lib Dem councillors voted to keep it shut for seven months – with an "update" in December – so they can try to pare down costs across the city's museums and galleries: a small but very symbolic element of a drive to put through £26m in spending cuts across the council's budgets.

The museum's supporters now fear the worst. One of them is Jim Slaven, an energised community activist and Edinburgh tour guide specialising in social history, who well knows what is afoot. "They've turned the city centre into a citadel for the rich," he recently said, "and now they're trying to write us out of the history of the city as well."

Here, once again, is a bafflingly overlooked story. Local councils have long been squeezed by the rising need for adult and children's social care, the damage inflicted by post-2010 austerity and the plain fact that the huge financial gaps have still not been filled. The resulting crises are usually reported in terms of their effects on youth clubs, children's centres, parks and libraries. But we also need to talk about museums, whose opening times are constantly being hacked back, while staff numbers are falling away. Even people who talk up a long record of resilience and creative thinking now fear widespread closures.

Last week, I had a long conversation with Sharon Heal, the director of the Museums Association . "I've worked in the sector for 10 years, and this is the worst I've ever seen it," she told me. "I've been in meetings recently with museum directors who are now dealing with insolvency experts." Her most urgent fears, she said, were not about the financial problems of the national museums largely clustered in London and part-funded from Whitehall, but those classified as "civic": flagship city museums, town-level institutions and a multitude of others that cover just about every aspect of national and local history, and depend for much of their funding on councils.

The British establishment has always had a talent for the grimmest of ironies, and there is a prime example here. The former Tory chancellor George Osborne is now chair of the British Museum . But when he began savagely cutting back the money that once went from central government to local authorities, smaller museums were plunged into a crisis that shows no signs of ending. In the 10 years to 2020, local authority spending on museums and galleries in the UK fell by 27% in real terms. Since then, as councils have continued to feel the pinch, museums have been further battered by Covid lockdowns and a cost-of-living crisis that has squeezed crucial sources of cash, not least the cafes and shops that top up their funds. All this is on Osborne's Tory successors, just as much as the original Conservative authors of austerity. "We cannot sit by as the left denigrate our history and pull down our monuments," said Kemi Badenoch last week : she and her colleagues' wilful neglect of museums shows that such talk is absurd.

Which brings me to a couple of points that would not be to her taste. The fact that some museums are full of imperial plunder and often owe their existence to money from slavery surely ought to put them at the heart of our long-overdue reckoning with empire. The first steps taken towards returning many artefacts and objects to their origin countries only highlight how significant that role could be. And in that area and plenty of others, the dangers of disinformation might be partly answered by boosting the involvement of museums in education, and focusing some of their attention on the terrain where conspiracy theorists operate. But how can museums rise to all those challenges if they are constantly worrying about their survival?

Browse the news and there it all is. Glasgow's museum service is facing drastic job losses . Earlier this year, amid dire funding issues rooted in the Welsh government's £3m cut to the relevant budget, doubts were expressed even about Wales's national museum in Cardiff. At the most grassroots level, fears have recently grown about the future of scores of places, from the Somerset Rural Life Museum in Glastonbury to Derby's industry-based Museum of Making . To make things even worse, miserable cuts-think seems to be recasting public assets as sellable commodities: witness an odious recent BBC news investigation into the value of Birmingham city council's art collection, put in the context of its effective bankruptcy. The logic at work was absolutely see-through: why not just flog it all off?

In March Rishi Sunak's government announced that a small number of museums – 26 in all – would benefit from a £22m grant aimed at "repairs, renovations and the development of digital infrastructure". But that move really only highlighted how much the crisis had been ignored. Ahead of this month's budget, the Museums Association is looking for "emergency stabilisation funding" of at least £30m, accompanied by what is really needed: a long-overdue financial strategy to finally allow museums to confidently look into the future. We shall see.

The news from Edinburgh says a lot about how high the stakes might be. When I read about the travails of the People's Story, I thought of a retail park on the site of the old Cortonwood colliery, the South Yorkshire pit where a walkout in March 1984 began the miners' strike – and where there is now just an apologetic-looking sign on the wall of a Morrisons supermarket, with a single sentence about that momentous event. At the general election , nearly a third of the vote here went to Reform UK, those shameless peddlers of specious history and tall tales . Part of the UK's malaise is our talent for creating the kind of vacuums that are then filled by the worst actors. Our precious museums, by contrast, are repositories of real and powerful stories: if they fall into even more decay and disrepair, we should all fear the consequences.