Starmer's Chagos surrender ‘will cost £5bn more than feared'
Sir Keir Starmer's deal to hand over the Chagos Islands will cost taxpayers £5 billion more than previously feared, the Tories have claimed.
The Prime Minister last month signed the agreement to cede the archipelago to Mauritius and then rent back the military base on Diego Garcia, its biggest island.
It had been calculated that the lease for the airbase, to be paid over the course of almost a century, would set the UK back at least £30 billion.
But ministers have now admitted that the inflation figure they are using to calculate payments for future years is higher than previously thought.
Mauritius, which has a GDP roughly the size of Leicester's, is going to use the huge windfall to deliver massive income tax breaks for its people.
Sir Mel Stride, the shadow chancellor, said: 'Rachel Reeves has been unmasked as the 'spend today, tax tomorrow' Chancellor.
'It's a damning indictment of this government that not only are British taxpayers footing the bill for Mauritians to have their income tax cut but the costs of this terrible deal grow day by day.
'It is yet another kick in the teeth for hard-pressed British taxpayers who are already preparing for another tax raid later this year thanks to Labour's incompetence.'
Downing Street has claimed Treasury calculations show the total cost of the Chagos deal will come in at £3.4 billion in real terms over 99 years.
However that figure has been widely disputed, with critics saying the true tally once inflation and other payments are taken into account will top £30 billion.
Those calculations were based on inflation averaging out at the Bank of England's target rate of 2 per cent across the entire century of payments.
But this week Darren Jones, the chief secretary to the Treasury, said that for most of the period the Treasury is assuming inflation will run at 2.3 per cent.
That would add £4.8 billion more than expected, according to Tory calculations, taking the final bill to the taxpayer up to just over £35 billion.
Ministers have confirmed in response to written questions that the cash will come out of the Ministry of Defence and Foreign Office budgets.
It could therefore count towards the Government's aim of spending at least 3 per cent of GDP on defence by the middle of the next decade, as well as any Nato targets.
Under the deal, the UK has given up sovereignty over the Chagos, a remote Indian Ocean archipelago, to Mauritius after 200 years of British rule.
Mauritius has agreed to lease back Diego Garcia, the biggest island in the chain and home to a British-US airbase, for the next century.
The agreement has been criticised over both the cost and security implications, with Mauritius growing closer to China, Iran and Russia in recent years.
Ministers have justified the pact by arguing the UK could have lost a future international court case brought by Mauritius, which claimed sovereignty.
They said that would have put the future of the base, which was used by jets operating during both Gulf wars and the Afghanistan war, in doubt.
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