Labour Faces Accusations of Misleading Parliament Over True Cost of Chagos Deal

Questions are mounting around Sir Keir Starmer and his ministers as accusations intensify that Labour misled Parliament regarding the actual cost of the Chagos Islands agreement with Mauritius. In February, Sir Keir assured MPs that cost estimates between £9 billion and £18 billion were grossly exaggerated, implying a substantially lower sum. Yet, recent revelations suggest the figure shared with Parliament may have been engineered to mask the true financial commitment.

A confidential document indicates that civil servants were first tasked with lowering the cost of the deal on paper to £10 billion. This involved factoring in an estimated annual inflation rate of 2.3 per cent across a 99-year period. The calculation did not end there. Officials then applied a further reduction each year, using the Treasury’s Social Time Preference Rate, at between 2.5 and 3.5 per cent annually. This approach contends that money spent today has greater value than funds designated for future spending.

With these adjustments, the final figure presented was calculated to be approximately 90 per cent less than the actual cash value of the commitments the UK will make to Mauritius over the next century. Critics, including Dame Priti Patel, have described this as a deliberate attempt to mislead the public and obscure the true impact on British taxpayers.

Priti Patel, writing for The Telegraph, argued that Labour employed “an accountancy trick” to reduce the stated cost to a mere £3.4 billion. This has led to considerable outcry among opposition MPs, particularly when contrasted with other Labour pledges such as the 10-year affordable homes plan, for which ministers included future inflation increases in their estimates, making higher spends on popular initiatives more publicly visible.

The details of the Chagos deal calculations came to light following a Conservative-initiated Freedom of Information request, after prior refusals from ministers to provide MPs with these numbers. Official Cabinet Office guidance states that any information released via FOI should also be provided to MPs, reflecting a commitment to transparency in government dealings.

Foreign Office sources maintain that the methodology used for the Chagos deal’s costing aligns with recognised standards for long-term government projects. However, the inconsistent application of discounting methods across different policies has fuelled questions regarding the government’s transparency and the integrity of its fiscal representations.

The controversy underscores the complexity of government accounting and the political risks that can arise when costings are not presented with absolute clarity. As scrutiny intensifies, calls for more openness and consistent financial reporting from both ministers and departments are only growing louder.