The UK Government’s deal to hand over sovereignty of the Chagos Islands to Mauritius will cost ten times more than Sir Keir Starmer has claimed, reports suggest.
Whitehall’s own estimate of the cost of giving away the archipelago in the Indian Ocean to the east African nation is almost £35 billion.
The figure, which was released to the Conservative Party under Freedom of Information laws, is far higher than the £3.4 billion figure the Prime Minister had previously stated in public.
Ministers are now facing allegations that they misled Parliament with a controversial “accountancy trick” to hide the size of the bill from taxpayers.
Britain is to hand over sovereignty of the British Indian Ocean Territory while paying billions of pounds to continue using the Diego Garcia base, a key military facility used by Britain and the United States.
Earlier this year, Sir Keir claimed that the deal would cost Britain £3.4 billion over a century, accounting for inflation and other discounts.
He also said that cost estimates of between £9 billion and £18 billion were “absolutely wide of the mark”.
But an official document produced by the Government Actuary’s Department shows the cost of the deal was first estimated at ten times the stated figure, at £34.7 billion, in nominal terms.
The cost was lowered by civil servants using inflation estimates over 99 years, then reduced again under the Treasury’s Social Time Preference Rate accountancy method used for long-term projects.
Dame Priti Patel, the shadow foreign secretary, has demanded a correction and apology from Sir Keir to MPs in the Commons.
She told The Daily Telegraph: “Instead of owning up to the costs, Labour have used an accountancy trick to claim the amount was only a mere £3.4 billion.
“We’ve all known it’s a terrible deal with huge costs to hard-pressed British taxpayers. But for months, ministers in public and Parliament have sought to cover up the true amounts.”
Kemi Badenoch, the Tory leader, added: “It’s bad enough that Starmer and Chancellor Rachel Reeves’ economic mismanagement has created a £50 billion black hole in the public finances, prolonging the cost of living crisis.
“Now our research has uncovered the Government’s own figures showing Labour’s Chagos surrender is costing the country another £35 billion. Add that to their £50 billion black hole, and it’s clear – when Labour negotiates, Britain loses.”
Foreign, Commonwealth and Development Office sources denied accusations that the calculation was part of a “cover-up”.
However, other projects announced by Labour, such as Deputy Prime Minister Angela Rayner’s 10-year affordable homes plan, have not used the same methodology.
Darren Jones, Chief Secretary to the Treasury, previously stated that it was “not normal practice” for the Government to release “corresponding financial analysis” alongside policy announcements.
A Government spokesman said: “The Diego Garcia military base is essential to the security of the UK and our key allies, and to keeping British people safe.
“The average cost is £101 million per year, and the net present value of payments is £3.4 billion – this is less than 0.2 per cent of the annual defence budget.
“The deal is supported by our closest allies, including the US, Canada, Australia and Nato. The costs compare favourably with other international base agreements, and the UK-US base on Diego Garcia is larger, in a more strategic location and has unparalleled operational freedom.”
