Marks and Spencer (M&S) is spearheading industry opposition to Rachel Reeves’ planned overhaul of business rates, warning it could force store closures and drive up prices across the grocery sector.

The Chancellor is expected to introduce a new surcharge on larger retail premises in her autumn Budget to raise £1.7bn, as part of a wider shake-up aimed at reducing rates for smaller stores.

However, major supermarkets including M&S, Tesco, Sainsbury’s, Asda and Morrisons have all warned that the move risks “accelerating the decline of the high street”, reported The Telegraph.

In evidence submitted to ministers, M&S warned that 111 of its stores would be hit by the proposed changes, with some sites facing closure.

“Given larger retailers are often anchor tenants on the high street, taxing them to support smaller stores is a false economy,” the retailer said. “If larger shops close, smaller shops suffer.”

“The proposed reforms could therefore accelerate the decline of the high street by encouraging retailers to close larger high street stores.”

M&S’s Oxford Street flagship is among the locations potentially affected by the changes, which ministers claim will primarily target online retail giants, but retail leaders argue the reality is quite different.

According to official figures, only around a fifth of the nearly 17,000 properties that would pay the surcharge are warehouses. The majority include high street stores, supermarkets, and businesses as varied as hotels, cinemas and zoos.

Retail bosses have warned that the new tax could push up prices for shoppers as supermarkets operate on slim margins. British Retail Consortium CEO Helen Dickinson said: “Food inflation is rising again, putting pressure on the cost of living for millions of households.

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“The situation for customers could become a lot worse if thousands of supermarkets and other large shops are landed with the Government’s new higher business rates multiplier. If we want to support the high street and avoid higher prices for customers, the Government must ensure no shop pays more as a result of the business rates reforms.”

The changes would see the existing relief for retail, hospitality and leisure businesses scrapped and replaced with a lower multiplier for properties valued below £500,000. To offset that, the surcharge on larger premises would need to be set at around eight pence in the pound, although industry sources fear it could be pushed higher to close a wider hole in public finances.

Seven major retailers, including M&S, Primark and Kingfisher, have written jointly to Reeves warning of store closures and job losses. Usdaw, the shopworkers’ union, has backed their call, highlighting the risk to jobs in key retail constituencies.

While ministers have hinted retail businesses could still be exempted from the surcharge, no final decision has been made. Retail leaders are now urging Reeves to focus the charge on office buildings and warehouses instead.

A Treasury spokesperson told the publication: “We are a pro-business Government that is creating a fairer business rates system to protect the high street, support investment, and level the playing field.”

“To deliver our manifesto pledge and provide certainty and support to the high street we intend to introduce permanently lower tax rates for retail, hospitality, and leisure properties from next year.

“Unlike the current relief for these properties, there will be no cash cap on the new lower tax rates, supporting some of Britain’s most loved high street chains to continue to create jobs and grow the economy.”