Keir Starmer's Chagos Islands deal to cost £12bn more than feared, analysis shows

Keir Starmer's Chagos Islands "surrender" deal could cost taxpayers £12billion more than planned, analysis shows. The Prime Minister's deal to keep the UK-US military base running in the archipelago was projected in August to see £34.7bn handed to Mauritius over the next 99 years.

But analysis by the TaxPayers' Alliance has found the actual sum could be even higher at £47bn over the next century. The group claims Government accountants calculated the value of future payments using an over optimistic forecast for inflation of 2.3% which doesn't match market expectations.

The group's analysis for the Daily Telegraph showed investors expect inflation to be 0.6 points higher on average, at 2.9%.

Researchers reached their forecast using the current yield of Treasury issued long-term gilts.

If the markets prove correct, the true cost of the Chagos deal over 99 years in cash terms is likely to be as high as £47bn, according to the analysis.

The TaxPayers' Alliance has urged the Government to axe the deal and save the UK from "a national humiliation" and help plug the country's fiscal black hole.

Darwin Friend, Head of Research at the TaxPayers' Alliance, said: "The grim reality for British taxpayers is that the Chagos surrender is likely to cost even more than has previously been revealed."

Conservative Shadow Foreign Secretary Dame Priti Patel has already accused ministers of trying to "cover up" the cost of ceding the Chagos Islands to Mauritius, accusing them of having used an "accountancy trick" to price the deal at £3.4bn.

The £34.7bn figure mentioned above was released after a freedom of information request to the Government Actuary's Department and is a nominal amount.

Adjusted to account for inflation, the deal was thought to be worth an average £101m a year in 2025/26 terms, lowering the value to around £10bn in today's money.

The UK Government has agreed to cede the Chagos Islands to Mauritius, but retain control of the military base on Diego Garcia.

Ministers feared that without a deal the base's future was in doubt amid challenges in international courts and tribunals.