Small businesses who have built their operations around Saturday collection and delivery options with the Royal Mail will be left reeling if the government scales back on the vital service.

That's today's warning from the Federation of Small Businesses (FSB). Despite an indication given earlier this week from Prime Minister Rishi Sunak that he would not countenance such a change in operations, the FSB is maintaining its warning in the wake of reports that Ofcom is inviting consideration of the change.

As the lobbying voice of more than 5.5m small businesses and self-employed traders, the FSB warned: "This will not just impact the householder waiting for birthday cards or hospital appointments, as many have built their business operations around the postal service."

Ofcom today said it is inviting views on change for the postal service.

In a statement, the regulator said: Postal services and postal workers remain essential to those who rely on them. Eight in 10 people (79%) say some things will always need to be sent by post. And three quarters of those who use postal services (74%) say they rely on the post for letters."

But it added: "However, while Royal Mail's obligations have not changed since 2011, letter volumes have halved and parcel deliveries have become increasingly important. Given the significant cost to Royal Mail of delivering the universal service, there is an increasing risk it will become financially and operationally unsustainable in the long term."

In response to Ofcom's position, FSB Policy Chair Tina McKenzie said: "Trading essential services for short-term savings is a slippery slope that may compromise the trust small businesses place in Royal Mail. Considering that 25 per cent of them rely on the postal service, these proposals could cause real disruption to our economy."

The answer to the service's problems lay in "modernising a service designed in the 1970s to fit the needs and expectations of today's culture in a sensible way that doesn't leave small firms feeling short-changed".

She added: "They will not just impact the householder waiting for birthday cards or hospital appointments. Many have built their business operations around the postal service, from the cake seller who needs to send a last-minute topper to letterbox flower companies which rely on next-day deliveries.

"These sellers are in a routine and knowing they can deliver things quickly allows them to build a positive relationship with their customer. Similarly, it will also affect the customer who prefers to schedule deliveries on a Saturday when they will be home to sign for it."

Furthermore, the impact for SMEs and sole traders could be ctastrophic: "If a self-employed carpet fitter doesn't get their materials on time, they can't fulfil their order. Similarly, a jeweller who doesn't receive metals regularly will struggle to meet their targets. Other couriers charge up to 200% more than Royal Mail to send the same item, and many small firms cannot afford to swallow that extra cost.

"This all comes at a time where our Small Business Index (SBI) shows retail confidence plunged to -29.8 points in the last quarter of 2023, a fall from the -22.8 points recorded in the last period. We cannot afford to take anything away from the sector.

"Traditional office-based firms are at risk too - business rates reminders, for instance, are rarely sent electronically. For firms in rural areas, the risk of a sporadic postal system is far greater, with 32 per cent reporting issues with the reliability of their broadband. They will lean on the postal service more than their urban counterparts, and letters arriving late can have unfair consequences.

"All of these firms have already had to handle Royal Mail cyber-attacks and strike action, highlighting how fragile the post system can be."

She added that regular post is "deeply integrated into the nation's routine and Royal Mail is a true British institution".

"It's understandable that the overall number of mail volumes has fallen in recent years, but the number of small businesses relying on it has not."