In an LBC interview this week, Andy Burnham has said he is looking at potentially higher business rates on large warehouses. With Burnham on track to become Prime Minister later this month, this is a comment worth taking seriously.
While we do not yet know the thresholds, rates or timelines that might be at play, the mechanism he’d be likely extending already exists, and it’s reshaping the economics of large-scale warehousing footprints.
How business rates work
Business rates for warehousing aren’t based on square footage directly. They’re based on ‘rateable value’, the Valuation Office Agency’s estimate of the annual rent a property could achieve on the open market. Floor area is the major input into that figure, but location, specification, and local market rents all feed into the rate applied per square metre.
Once a property has a rateable value, that figure is multiplied by a government-set rate, the Uniform Business Rate, to produce the bill. There are two multipliers depending on the size of the rateable value, and various reliefs can reduce the final figure.
The detail that matters here: from April 2026, a higher multiplier already applies to properties with a rateable value of £500,000 or more, a bracket that includes many large distribution warehouses. HM Treasury expects this to raise around £100m more from large distribution warehouses in 2026/27, funding lower multipliers for retail, hospitality and leisure. It is a fair guess that Burnham’s proposal would extend this shift by further tweaking these two thresholds.
Why this makes footprint efficiency more relevant, regardless of the exact policy
Rateable value is (in reality) a tax on floor area, not on storage volume or throughput. A warehouse that increases eaves height and storage density without expanding its footprint doesn’t see its rateable value move, because the VOA measures square metres, not cubic metres. A warehouse that expands its footprint pays the full rate on every additional square metre.
This was already true before Burnham’s comments. What’s changed is the direction of travel on the multiplier applied to that floor area. If rates on large-format space are heading up rather than staying flat, the gap between a low-density, sprawling footprint and a high-density, taller one gets wider every year, not just at the point of construction.
This is the argument for treating footprint as a variable you actively manage rather than a fixed cost you absorb. Two networks with identical throughput can carry very different rates exposure depending on how that throughput is packed into space. That’s a modelling challenge and it’s one you can answer today, independent of what Burnham eventually announces.
Where this connects to cost-to-serve
Rates sit inside cost-to-serve as a fixed cost allocated across units, orders, or customers, and fixed costs allocated across a shrinking or shifting volume base can distort decisions that look sound on paper.
A site carrying rising rates exposure because of its size band, rather than its output, needs that cost visible at the SKU or channel level, not buried in a single warehouse overhead line. Without that visibility, decisions about which channels or product lines to prioritise get made on incomplete information.
The practical question worth answering now
Most businesses running large-format warehouse space don’t currently have a clear answer to a fairly basic question: what does your rates liability look like per unit of throughput, and how does that compare to a denser or better-configured alternative on the same site or a redesigned network.
Answering that means building a proper capacity model, and rates exposure is only one of the things it tells you. The same model shows you where you’ll hit a service-level wall before peak, whether a proposed expansion actually earns its keep or just shifts the bottleneck somewhere else, and how much slack is sitting across a network that could be consolidated into fewer, better-utilised sites.
None of this needs Burnham’s policy to be finalised. It’s a question you can model against your data today, and stress-test against whatever comes next, whether that’s a rates change, a peak surge, or a new channel.
If you want a clear picture of what your capacity actually tells you, get in touch and we’ll show you what the data says about your specific footprint.
About the author
Harry spends his time helping clients across all industries build better automated systems, workflows and processes. Specialising in complex data wrangling across diverse platforms, Harry excels at solving intricate technical challenges and streamlining data workflows.