Royal Mail is facing fresh turmoil after the head of its main operation quit in a dispute over cost cuts, The Times has learnt.

Ian Griffiths, the managing director of Royal Mail Letters and No 3 in the group hierarchy, has walked out after the board rejected his business plan following pressure from the Government for about £300 million of cost cuts.

Mr Griffiths, who has been with Royal Mail for only a year, is believed to think that the cuts would be too severe ahead of sweeping automation of the business.

It is believed that the cuts were put in Royal Mail’s final business plan, which was drafted to win a £3.9 billion government bailout. Mr Griffiths was in charge of day-to-day running of the entire letters operation of Royal Mail.

Adam Crozier, the group’s chief executive, will take over day-to-day control of the letters business. It is the second time in just over two years that Mr Crozier has had to step into the breach after the sudden departure of the head of the letters division. In October 2004, Elmar Toime, the former chief executive of New Zealand Post, left with a £750,000 pay-off after 18 months in the job.

Mr Griffiths joined Royal Mail from GKN Automotive on a £500,000 salary in February last year. A spokesman for Royal Mail said that severance terms would be disclosed in the annual report. He said: “Adam Crozier will take over the direct running of the business and we will begin looking for a new person for the role going forward.”

The exit of Mr Griffiths comes at a crucial time for the organisation as it prepares for an overhaul and as it is in pay talks with its main union. Royal Mail and the Government are also struggling to find a new deputy chairman, who the Government wants to succeed Allan Leighton as chairman. Mr Leighton’s contract ends next March.

The exit of the head of letters comes after a series of departures as Royal Mail struggles to strengthen its executive team. In January, David Flowers, the head of property, left. Marisa Cassoni, the finance director, left last year as did David Mills, the head of the Post Office division.

More bad news is expected soon with the publication of the group’s full-year financial results. Its interim results, which were delayed several months, showed an 86 per cent plunge in profits to £22 million.

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