At Prime Minister's Questions on 21 January, Opposition leader Kemi Badenoch claimed the Prime Minister is “giving away” the Chagos Islands and “paying £35 billion” to continue administering Diego Garcia, which hosts a UK-US military base. The Government’s calculations offer three different ways to measure the cost of the Chagos deal.
The agreement gives sovereignty over the Chagos Archipelago to Mauritius. The islands were previously part of the British Mauritius colony but were split off in 1965 to form the British Indian Ocean Territory. Mauritius gained independence in 1968 and has claimed sovereignty over the archipelago since the 1980s. The deal followed negotiations started under the previous Tory administration after a 2019 advisory opinion by the International Court of Justice said the UK should cede control.
The deal allows the UK to maintain authority over Diego Garcia for an initial 99 years. The explanatory memorandum sets out payments across the 99-year treaty, split into four parts: a £165 million annual payment for the first three years; from year four, £120 million annually, fixed until year 14 then linked to UK inflation; a single £40 million payment in year two for a Chagossian trust fund; and from year four, a fixed £45 million annual grant for 25 years for Mauritius’s economic development.
The £35 billion figure comes from a freedom of information release from the Government Actuary’s Department. The nominal total of payments adds up to £34.7 billion over 99 years, but this does not reflect today’s value. The £10 billion total reflects all payments in 2025-26 terms, accounting for inflation. The £3.4 billion estimate cited by the Government is the “net present value”, which follows the Treasury’s Green Book guidance by removing inflation effects and discounting for social time preference.
