The UK government's agreement to transfer sovereignty of the Chagos Islands to Mauritius is estimated to cost nearly £35 billion, ten times more than Prime Minister Sir Keir Starmer has publicly stated, according to reports.
Whitehall's own estimate, released to the Conservative Party under Freedom of Information laws, contrasts sharply with the £3.4 billion figure cited by Starmer. Ministers face accusations of misleading Parliament by using an 'accountancy trick' to conceal the true cost from taxpayers.
The deal involves Britain handing over the British Indian Ocean Territory while paying billions to continue using the Diego Garcia military base, a key facility shared with the United States. Starmer had previously dismissed cost estimates of £9–18 billion as 'wide of the mark'.
An official document from the Government Actuary's Department shows the nominal cost was first estimated at £34.7 billion. This was reduced using inflation estimates over 99 years and further lowered under the Treasury's Social Time Preference Rate method.
Shadow foreign secretary Dame Priti Patel demanded a correction and apology, stating: 'Instead of owning up to the costs, Labour have used an accountancy trick to claim the amount was only a mere £3.4 billion.' Conservative leader Kemi Badenoch added that the £35 billion cost compounds Labour's '£50 billion black hole' in public finances.
A government spokesman defended the deal, saying the Diego Garcia base is 'essential to the security of the UK and our key allies', with an average cost of £101 million per year. He described the net present value of payments as £3.4 billion, less than 0.2 per cent of the annual defence budget, and noted support from the US, Canada, Australia and Nato.
