Sir Keir Starmer’s plan for the Chagos Islands will cost 10 times more than he said, according to official figures.
The Government’s own estimate for handing over the British Indian Ocean Territory to Mauritius is almost £35bn, documents released under the Freedom of Information Act show – far higher than the £3.4bn figure Sir Keir has cited in public.
Labour ministers now face accusations they misled Parliament and the press with an “accountancy trick” to conceal the true scale of the bill from taxpayers. The news comes as figures reveal Mauritius now beats the UK in financial freedom rankings.
Under the terms of Sir Keir’s deal, the UK will give up the Chagos Islands by the end of this year and lease back the Diego Garcia military base, a facility built in the 1970s and used by UK and US forces.
The price tag has been hotly contested. Sir Keir said in May it would be £3.4bn over 99 years, accounting for inflation and other discounts, while the Conservatives argued it would total £30bn.
An official paper from the Government Actuary’s Department shows the cost was first put at £34.7bn in nominal terms – ten times Sir Keir’s figure.
It sets out how the number was then lowered using inflation assumptions, before being reduced again under a controversial accounting method sometimes used for long-term projects.
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Ministers refused to release the total to Parliament. The sum is comparable to 10 Queen Elizabeth-class aircraft carriers, or more than half the annual schools’ budget.
Sir Keir is now accused of misleading Parliament after telling MPs in February that estimates between £9bn and £18bn were “absolutely wide of the mark” and indicating the true figure was lower.
According to the document, civil servants were first instructed to bring the headline cost down on paper to £10bn, using an estimated annual inflation rate of 2.3 per cent over 99 years.
It was then cut again by between 2.5 and 3.5 per cent per year using the Treasury’s Social Time Preference Rate, the idea that money spent now is worth more than funds earmarked for the future.
The final number was calculated to be 90 per cent lower than the cash value of payments the UK will make to Mauritius over the next century, in what critics say was a deliberate attempt to mislead the public.
Writing for The Telegraph, Dame Priti Patel, the shadow foreign secretary, said: “Instead of owning up to the costs, Labour have used an accountancy trick to claim the amount was only a mere £3.4bn.
“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.”
Foreign Office sources insisted ministers had used a “standard” calculation for long-term government spending, and denied accusations that it was part of a “cover-up”.
However, other Labour announcements have not relied on the same method, allowing ministers to trumpet higher spending on popular policies. Angela Rayner has since launched a 10-year affordable homes plan that included inflation-level increases in government spending as part of the cost – a method not used with the Chagos deal.
The Foreign Office has been emailed by the Express for comment.
The calculations behind the agreement emerged in response to a freedom of information (FOI) request submitted by the Conservatives.
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 £101m per year, and the net present value of payments is £3.4bn – this is less than 0.2 per cent of the annual defence budget.”
