Small firms have “serious concerns” that privatisation of the Royal Mail could push up postage costs.

Business Secretary Vince Cable announced details this week of the planned sell-off of a majority stake in a Stock Market flotation. The business is valued at up to £3 billion. Members of the public will be able to buy shares in Royal Mail, while 10% are reserved for around 150,000 employees who will be eligible for free shares. But unions have criticised the plan.

The Federation of Small Businesses said that its members needed an affordable universal postal service and it was also worried about people living in remote communities.

Roger House, FSB chairman for Kent and Medway, said: “The Federation of Small Businesses (FSB) understands reform of Royal Mail is needed to make it more competitive. However the FSB has serious concerns about the impact this could have on postage costs, and for those living in remote communities. Recent sharp increases in postage costs, both of letters and parcels, have already had a negative impact on small businesses in Kent and Medway.

“Additional rises would only further undermine the ability of the smallest firms and start-ups to compete, and especially those who operate in the growing e-commerce field. Any weakening of the universal service obligation would only add to these problems. It’s therefore vital regulators are fully aware of these issues and ensure fairness in the market place especially for the smallest firms and those in Kent’s rural communities.”