The country faces its first national postal strike for more than a decade in a dispute over pay and cost cuts that would halve collections and bring in other sweeping changes, The Times has learnt.

The Communication Workers Union (CWU) has said it will ballot for industrial action after Royal Mail offered a pay freeze for this year, with small lump-sum payments for some workers. It is the first time in many years that a pay freeze has been proposed.

The postal group is also planning £350 million in cost cuts, which will include reducing by half the number of collections from post boxes. In busy city locations they will fall from an average of four a day to two and, in other areas, to one.

Weekend working and night shifts at many mail centres will cease, meaning that post that arrives over the weekend will remain untouched until Monday morning. The CWU has branded the moves a “cost-cutting frenzy”. In a letter to its 150,000 Royal Mail members the union said: “Unless there is a dramatic change in Royal Mail’s attitude, there is no prospect of us reaching an agreement and a major dispute is inevitable.”

The CWU accused Royal Mail of blaming competition in the postal market for a “slash-and-burn” approach to pay and working conditions. Royal Mail said that its workers were paid too highly compared with the industry average, although last year it signed an agreement to improve pay. The union is fighting for pay to be brought into line with the national average, which would require a 27 per cent increase.

Royal Mail said yesterday that it was “astonished” at the threat of strike action. A spokesman said: “We are seeking to reward our people in a way that doesn’t add to the £730 million annual pension fund cost, nor does it hinder our ability to operate in a market where our rivals handle one mail item in every eight.”

Lump-sum payments of between £250 and £550 will be available if working changes are made. However, workers also will lose the higher payments that are made for nights and weekends.

A national strike would cripple postal services because Royal Mail’s rivals do not have national networks and concentrate solely on business post. They also rely largely on Royal Mail for the “final mile” of delivery.

The CWU narrowly lost a national strike ballot four years ago. Allan Leighton, the Royal Mail chairman, had mounted a counter-offensive by sending personal letters to Royal Mail workers but the pay offer then was worth 14 per cent over three years.

Royal Mail has a 22-point plan to cut costs by £350 million by the end of the year. A dispute over cost-cutting led to the recent departure of Ian Griffiths, the managing director of Royal Mail, after little more than a year in the job. His departure marked the second time in 2½ years that the head of the letters division quit Royal Mail suddenly.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive