The true cost of the Chagos Islands deal exposed

Official figures have revealed that the real cost of Sir Keir Starmer’s Chagos Islands agreement is nearly £35bn—ten times higher than the publicly claimed amount. The Labour Government’s estimate for relinquishing the British Indian Ocean Territory to Mauritius far exceeds the £3.4bn figure previously cited by Starmer. This discrepancy emerged after documents released through a Freedom of Information request showed the Government Actuary’s Department initially assessed the price tag at £34.7bn in nominal terms.

Under the arrangement, the UK will transfer sovereignty of the Chagos Islands to Mauritius by the end of the year, while leasing back the Diego Garcia military base—a strategic asset used by British and US forces since the 1970s. Despite Starmer’s claim in May that Britain’s financial commitment would be £3.4bn over 99 years, this figure has since been heavily contested by Conservative MPs and independent analysts.

The Government has been accused of employing creative accounting to downplay the deal’s headline cost. According to officials, the £35bn sum was reduced on paper by applying a 2.3 per cent annual inflation discount over the deal’s lifespan, and further diminished by up to 3.5 per cent yearly using the Treasury’s Social Time Preference Rate. This method, which assumes current spending is worth more than future spending, slashed the publicised cost by 90 per cent compared to the projected cash payments scheduled for the next century.

Opponents have charged Labour ministers with misleading both Parliament and taxpayers. Shadow Foreign Secretary Priti Patel criticised these accounting techniques, describing the move as an “accountancy trick” and accusing ministers of concealing the true burden on British public finances. She argues that such sums could otherwise fund critical home priorities, from new infrastructure and hospitals to tax cuts or social services.

Questions have also been raised about national security implications. The treaty will require the UK to disclose information about military activity on Diego Garcia, after ceding control to Mauritius. Critics are concerned that sensitive data might reach nations with whom Mauritius has deepening ties, such as China, Russia, and Iran. Starmer and his Government have denied any risk to security or transparency, insisting the military facility remains essential to British and allied interests, and pointing to support from the US and NATO allies.

The contrasting accounting methods have fuelled further controversy. Labour has used different calculations for its high-profile domestic spending pledges, making the true scale of the Chagos deal less visible. This has prompted fresh calls for greater transparency in how government finances long-term international obligations. The debate over the cost, transparency, and strategic implications of the Chagos Islands agreement seems set to continue in Parliament, with Conservative critics vowing to keep the matter in the public eye.