Over 250 Prospect members at the museum are to be balloted on industrial action that is likely to throw the museum into disarray in the new year – one of the most lucrative periods of the year. Members of the PCS union are also set to be balloted.

The union says the below inflation offer for 2004 pay – worth 2.5%– is derisory, does not offer pay progression and even falls short of the Treasury’s 3.5% pay cap on public sector settlements. Members are also angry that the museum is unable to implement agreed changes to its pay and grading structure. These were intended to tackle the lack of progression and have been paid for by job losses and restructuring.

At the same time management has blamed a lack of funding for a decision to close its library and some galleries. Prospect is deeply concerned that the funding crisis –a misery shared by all national museums – threatens core activities and the fabric of the museum. The union has warned that the loss of the library will have a deep impact on jobs, the academic world and restrict access to collections.

Prospect negotiator Emily Boase said: "Once again the Department of Culture, Media and Sport is relying on the goodwill of staff to keep the museum going, rather than put in the resources that are so vitally needed.

"Our members are intensely proud of the museum and its place in our national life. They are a dedicated group who understand the financial pressures facing the museum as it struggles to maintain ground-breaking exhibitions and retain free admission with insufficient Treasury funding. But the funding crisis has now reached the stage where it threatens the museum’s ability to carry out its core activities, with a knock-on effect for staffing levels, recruitment and retention."

The museum, said Boase, had successfully pursued the government’s modernisation agenda on better delivery of education, social inclusiveness and accessibility. "But the demands to trim even more at the museum will lead to a scenario where its main purpose is to realise maximum income from visitors through retail opportunities. Scholarship, research and access to collections will be relegated to poor cousins and locked in the attic."

Prospect and PCS have appealed to Tessa Jowell, Secretary of State for Culture, Media and Sport, for their concerns to be taken into account when grant-in-aid for the national museums and galleries is allocated.