Rachel Reeves dug in against farmers heading to London for large-scale protests over controversial changes to inheritance tax.
The Chancellor and Environment Secretary Steve Reed issued a joint statement ahead of what was expected to be demonstrations in the capital by as many as 20,000 farmers, possibly even more, outside Parliament.
Organisers have urged farmers not to bring tractors and other farm machinery but some may defy the pleas.
In their statement, Ms Reeves and Mr Reed insisted they were “steadfast” in their commitment to UK farming and “recognise the strength of feeling expressed by farming and rural communities” in recent weeks.
“It’s why we are investing £5 billion into farming over the next two years, the largest amount ever directed towards sustainable food production, rural economic growth and nature’s recovery in our country’s history,” they argued.
“But with public services crumbling and a £22 billion fiscal hole that this Government inherited, we have taken difficult decisions.”
They argued the Budget reforms to Agricultural Property Relief would mean wealthier estates and the most valuable farms “pay their fair share to invest in our schools and health services that farmers and families in rural communities rely on”.
But farmers reject the Treasury’s calculations and say far more families will be hit by the changes to inheritance tax (IHT) coming into force in April 2026.
The National Farmers’ Union (NFU) is holding a mass lobby of MPs with 1,800 of its members urging backbenchers to stand up against the IHT changes.
Between 10,000 and 40,000 farmers and their families are also set to take part in a mass rally in Whitehall.
Hundreds of police officers will be on duty in case tempers flare into public disorder.
Previously, farming businesses qualified for 100% relief on IHT on agricultural property and business property.
But now the tax is being imposed on farms worth more than £1 million, with an effective tax rate of 20% on assets above the threshold, rather than the normal 40% rate for inheritance tax.
The Government says that the actual threshold before paying inheritance tax could be as much as £3 million, once exemptions for each partner in a couple and for the farm property are taken into account.
The Treasury says around 500 wealthy estates a year are expected to pay inheritance tax under the changes.
However, the National Farmers’ Union (NFU) says farm businesses have also qualified separately for business property relief, which can cover things such as harvested grain and livestock, machinery and diversified businesses such as camping on a farmer’s field.
Now the two are combined, with a single £1 million allowance before inheritance tax is levied, which could mean more farms are in scope.
The NFU points to figures from the Environment Department showing that 66% of farm businesses in England have a net value of more than £1 million.
The union’s president Tom Bradshaw was set to tell hundreds of NFU members at Church House, Westminster, before the lobby of MPs: “I don’t think I’ve ever seen the industry this angry.
“To launch a policy this destructive without speaking to anyone involved in farming beggars belief.
“Your key job today is to look your own MPs in the eye and make them understand that there is a political price to be paid, by them, not just ministers, for supporting this rotten policy.”
The Tories deny the Labour claim that they left a £22 billion black hole in the public finances, through, the Office for Budget Responsibility has said it was unaware of nearly £10 billion of spending pressures when it drew up its economic outlook at the March Budget.
