WORKERS at Liverpool’s biggest landlord have been told their annual inflation pay rises are to be axed permanently.

Liverpool Mutual Homes (LMH) originally told staff it had “provisionally rejected” cutting 22 jobs or cutting pay by 7.5% to plug a £750,000 gap in its budget.

Unions warned there was already a high level of mistrust and condemned the “threatening tone” of the letter sent to staff warning of the change in terms and conditions.

Yesterday, the chief executive of LMH, Steve Coffey, said that redundancies and pay cuts had now been ruled out. But the social landlord is proposing to introduce a new “non-incremental” pay structure that will see only those judged to have performed well enough get pay rises.

The measure would therefore wipe out inflation linked pay rises for the 273 staff working for LMH.

LMH, which has been running for less than two years, said it was being forced to take the action because the national rent setting formula was seeing it lose 1.4% of its income.

But the move has angered staff who say the social landlord should have planned better after receiving millions since its inception in April, 2008.