Business groups have warned that urgent reform is needed over business rates to avoid “ghost towns” and “lost jobs” in letters to the new Chancellor.

In a letter to Chancellor Rishi Sunak, organisations including the Association of Convenience Stores, British Chambers of Commerce, British Property Federation and Federation of Small Businesses all called for a major overhaul of the current rates system.

Fifty of the UK’s leading hospitality bosses have also signed a separate letter by industry group UKHospitality criticising the impact of a “broken and archaic” business rates system on the sector.

Major pub, bar, restaurant and hotel firms including Greene King, Wagamama and JD Wetherspoon called for immediate action after a year marked by more closures and insolvencies in the sector.

Figures from the Centre for Retail Research revealed that 11,280 jobs were lost in the casual dining sector alone last year, after casualties including Jamie Oliver’s restaurant empire.

UKHospitality warned the Government that inaction over the tax – which cost firms in the sector £3 billion last year – risks creating “ghost towns, lost jobs, lost investment and a drag on the economy”.

The letter said: “There is a consensus across all sectors that the current tax system is not working fairly, and that there needs to be a move away from business rates.

“Support and reform will help to sustain and reinvent communities across the country, reversing a decade of decline in many Northern towns and cities, for example.

“The urgency for action cannot be overstated.”

The industry group said the Government “must cut” rates by 10% and extend relief to more hospitality businesses to avoid further damage to the sector.

It said this must also be accompanied by an immediate and rapid review of the current system with a commitment to shift the tax burden away from property.

Kate Nicholls, chief executive of UKHospitality, said: “Hospitality is a sector that touches people in communities all across the UK but is being harmed by an outdated business rates system that is simply not fit for purpose.

“Rising business rates bills mean hospitality businesses don’t have the cash to invest in jobs and revitalising high streets and rural communities.”

Adam Marshall, director general of the British Chambers of Commerce, said: “Britain’s broken business rates system is one of many upfront costs that are holding back the growth potential of companies across the UK.

“It’s time for the Government to deliver on its manifesto pledge to review and reduce business rates so firms can invest in their people and prospects instead.”