eBay warns plans to remove price cap on Royal Mail packages could put pressure on sellers

Companies using eBay have already experienced disruption as a result of a year-long Royal Mail strike. Photo: Thomas Creech/SOPA Images

Small Business Federation echoed eBay's comments. Politics Chair Tina McKenzie said: “Removing restrictions on Royal Mail's package delivery services could place an additional burden on the shoulders of many small business owners and self-employed individuals.

“The lack of resources and bargaining power that small firms face in the postal market means that most SMEs have very limited ability to negotiate price with delivery companies.”

She added: “For small firms Our latest research shows that a third of the companies that trade internationally are affected by high intermediary fees.

“There is already an overload of price pressure holding back the growth of small firms, not least the new interest rate hike. Giving permission to a large corporation to raise the costs of small firms just doesn't seem right at the moment.”

However, Royal Mail called for further restrictions to be lifted and criticized Ofcom's decision to maintain the price ceiling for second-class letters.

A spokesman said: «We cannot understand the logic of the regulator imposing a drastic price cap on second class and large letters when Royal Mail lost £419m last year and letter volumes declined more than 60%. since their peak in 2004-2005.

“Along with the high fixed costs associated with the six-day letter delivery and five-day parcel delivery model and the continued structural decline in letters, the constraint is another factor affecting financial sustainability of Universal Service.

“We will actively participate in the consultation process, including providing Ofcom with a detailed, fact-based presentation.”

An Ofcom spokesman said his proposals would not interfere with the regulatory authority to intervene if necessary before the end of the next regulatory period in 2029.