Latest news with #MauritiusDeal
Yahoo
14-06-2025
- Business
- Yahoo
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. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
14-06-2025
- Business
- Telegraph
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.
BBC News
11-06-2025
- Business
- BBC News
Tories accuse PM of funding tax cuts for Mauritians with Chagos deal
Sir Keir Starmer has defended the UK's £3.4bn deal to hand over sovereignty of the Chagos Islands to Mauritius, while retaining control of a UK-US military base on Diego prime minister's questions, Conservative leader Kemi Badenoch called it a "terrible" deal and asked "why on earth" British taxpayers should be paying for tax cuts in Mauritius. Last week, Mauritian prime minister Navin Ramgoolam said the money from the Chagos deal would be used for debt repayments, as part of a Budget package that will see 80% of workers exempted from income prime minister said the UK risked jeopardising the "vital intelligence and strategic capability" on Diego Garcia without a deal. "Legal uncertainty would compromise it in very short order," he told MPs, adding "no responsible prime minister would let that happen".He said: "We have secured the base for the long term and that has been welcomed by our allies - by the US, by Nato, by Australia, New Zealand, India."It's been opposed by our adversaries - Russia, China and Iran. And in the second column we add Reform, following Putin, and the Tories following Reform."But Badenoch insisted the deal had "nothing to do with national security", adding that she had seen the security briefings when she was in government and it was "bad deal before and it's still a bad deal".Negotiations to hand over sovereignty of the Chagos Islands to Mauritius began under the previous Conservative the terms of the deal agreed by Labour, the UK will lease use of the Diago Garcia base for a period of 99 UK will pay £165m in each of the first three years. From years four to 13, it will pay £120m a year. After that, payments will be indexed to Keir says this will average out at a cost of £101m a year, although this figure is disputed by the Conservatives, who say it will be much his Budget, Navin Ramgoolam announced plans to reduce Mauritius's public sector debt to 60% of GDP in the long term."These projections are inclusive of the revenue from Chagos, which will be used for debt repayment for the first three years," he said in a speech to the country's also announced that 80% of workers will not pay income tax but higher earners will pay comes as a panel of experts urged the UK to renegotiate the Chagos deal as it "fails to guarantee" the rights of the Chagossian panel, appointed by the UN Human Rights Council, said it was "gravely concerned about the lack of meaningful participation of Chagossians in the processes that have led to the agreement".Philippe Sands KC, who represented Mauritius in its long-running legal battle with the UK over the Chagos islands, insisted this was not the case. "I want to really knock on the head this idea that all of the Chagossians were not involved in the various processes. That is simply not true," he told a House of Lords committee."It is true, however, that the Chagossian community is divided and I respect that division."The "quid pro quo" for the military base remaining on Diego Garcia was that Chagossians would be allowed to settle on the outer islands of the archipelago, he told said he understood the "bitterness and the hurt" of the Chagossian community in the UK, who were "forcibly deported from Diego Garcia and who wish to return and will not be able to return".But he said "most in Mauritius and Seychelles have made very they wish this deal to go ahead" - and they had been "deeply involved in consulting with successive prime ministers of Mauritius".He told peers the deal "will enhance Britain's position in the world" as a country that respects "the rule of law".It follows a 2019 advisory opinion from the International Court of Justice saying the islands should be handed over to Sands, who revealed that he had become a Mauritian citizen in 2020, so he could take part in a hearing in person during the Covid pandemic, said he had not been working "pro bono" for the country's government but could not say how much he had been also paid tribute to Liz Truss, who he said had kicked off negotiations during her brief tenure in Number is disputed by Truss, who has blamed Boris Johnson for starting the process when he was PM.
Daily Mail
11-06-2025
- Business
- Daily Mail
Mauritius 'will use cash from Labour's Chagos Islands deal to scrap income tax for 81% of its population and help pay off its national debt'
Sir Keir Starmer 's deal to hand over the Chagos Islands will fund sweeping tax cuts in Mauritius, it has emerged. The Prime Minister last month signed an agreement to cede sovereignty of the stretegically-important Indian Ocean archipelago to Mauritius. The deal will see the UK lease back a military base on Diego Garcia, the largest of the islands, with Britain paying Mauritius an average of £101million a year for 99 years. Sir Keir said the 'net cost' of the agreement will be £3.4billion, after adjusting for factors including inflation. But opponents said the true cost is ten times as much. According to The Telegraph, Mauritius will use almost £500million of the payments to help clear its national debt. This will allow the east African country to abolish income tax entirely for 81 per cent of employed Mauritians and raise minimum salaries. It has also been pointed out how, under the Chagos Islands deal, UK taxpayers are now funding more than 4 per cent of the Mauritian government's total budget. It comes amid warnings that Britons face fresh tax rises when Chancellor Rachel Reeves unveils her next budget in the autumn. A black hole in the public finances has been left by Ms Reeves' humiliating U-turn on axing winter fuel payments for pensioners. The Chancellor is also under intense pressure from Labour MPs to splurge more by abolishing the two-child benefit cap. Navin Ramgoolam, the Mauritian PM, announced the tax changes in his own budget speech last Wednesday. He said the UK's payments from the Chagos deal for the next three years would be used to help pay off his country's national debt, which has reached 90 per cent of GDP. Mauritius is also poised to raise the minimum salary before an employee pays income tax to £8,073 a year, which will scrap income tax entirely for 44,000 people. 'As a result of the measures I have introduced, 81 per cent of employees in our country will not pay any income tax,' Mr Ramgoolam said, according to the newspaper. Tory leader Kemi Badenoch said: 'Labour have lost control. They've raised taxes on working families. Businesses are closing. People are losing their jobs. 'Labour's answer: fund a tax cut for…Mauritians. They are not on your side.' Dame Priti Patel, the shadow foreign secretary, said: 'The only people benefiting from Labour's higher taxes are the people of Mauritius. 'While causing a financial black hole in Britain, whacking up our taxes and planning further tax raids, Labour's Chagos surrender deal means families in Mauritius will see their taxes cut at our expense. 'This is an insult to hard-working British people who have once again been betrayed by Keir Starmer with millions more paying more in tax.' Dame Priti also highlighted Mauritius government documents that showed how the UK's Chagos payments are set to make up more than 4 per cent of the country's budget this financial year. The Foreign Office has been approached for comment.
Telegraph
23-05-2025
- Business
- Telegraph
‘Lying' Starmer reported to watchdog over true cost of Chagos deal
The official statistics watchdog has been asked to investigate Sir Keir Starmer's claims about the cost of giving away the Chagos Islands. The Prime Minister was accused of 'lying to the public' on Thursday as he signed an agreement to give the Indian Ocean islands to Mauritius and rent back a key military base. He claimed the deal would cost £101 million annually, amounting to £3.4 billion over 99 years. However, the true cost is likely to exceed £30 billion in cash terms because of rising inflation and additional schemes to fund development projects in Mauritius. The Tories have now written to Sir Robert Chote, the chairman of the UK Statistics Authority, asking him to examine the numbers cited by the Prime Minister. In the letter, James Cartlidge, the shadow defence secretary, accused Sir Keir of 'misuse of statistics'. As the statistics watchdog, Sir Robert can rebuke ministers in a letter if he believes they have misled the public. The criticism can be highly embarrassing for ministers, but he has no further powers. In his letter, Mr Cartlidge said Sir Keir was guilty of a 'statistical sleight of hand' and may have breached the code of practice on statistics. 'Yesterday, when asked about the cost of the deal, the Prime Minister claimed it would be £3.4 billion, even after accounting for inflation,' he said. 'This figure is inaccurate. Independent analysis suggests that, once a conservative rate of inflation is accounted for, the true cost of the deal is likely to be in excess of £30 billion. 'That's a difference of £27 billion – a substantial amount that could mislead the public about the real financial cost.' Britain has agreed to pay to rent the Diego Garcia military base for the next 99 years, and contribute more than £1 billion in development funding. Sir Keir said on Thursday that the average annual cost of the deal would be £101 million. This figure over 99 years would equate to £10 billion – but the Prime Minister claimed that the total 'net cost' over a century would be £3.4 billion. This is because the Government has performed calculations on the payments that factor in 'the value society attaches to present as opposed to future consumption' and an estimated rate of inflation over time. This is called the 'social time preference rate'. Analysis by The Telegraph shows the cash-terms cost is likely to be around £30 billion, including a century of lease payments, most of which will be increased in line with inflation, plus two schemes to support native people of the Chagos Islands and pay for infrastructure in Mauritius. In his letter, Mr Cartlidge wrote: 'I understand the Government has used the social time preference rate (STPR) to calculate the figure used by the Prime Minister. The figure is therefore a representation of 'social time preference', not a representation of the direct cost to the taxpayer. However, the Prime Minister stated that this is the 'net cost'. 'The Prime Minister has therefore misrepresented the figure by stating that it is a net cost when in reality it is a figure for the social time preference. 'Such discounting in the public sector is intended to allow the costs and benefits of different policies with varying time spans to be compared on a common basis. 'But in this case, it is being used as a statistical sleight of hand to hide the true cost to taxpayers of this surrender deal and appears to be a breach in the code of practice on statistics which states that 'statistics, data and explanatory material should be presented impartially and objectively'.' He also said Sir Keir should have published the source statistics. 'The Government's failure to publish the statistical methodology therefore appears to be in breach of the code,' he said. 'As the UK Statistics Authority, your role is to promote transparency and accuracy in the use of public data. 'I therefore ask you to investigate whether the Prime Minister's figure follows the code of practice on statistics to make sure that public confidence in public statistics is upheld.' On Thursday, both Conservatives and Reform UK accused Sir Keir of misleading the public. Dame Priti Patel, the shadow foreign secretary, said: 'Labour are lying to British taxpayers with their made-up numbers and dodgy accounting, and the true reality of these costs is frightening for all to see. 'We are now bound by treaty to both pay for the indignity of the surrender, and to line Mauritius's own coffers – and the true cost of this 'surrender tax' to the British public now seems set to top an eyewatering £30 billion.' On Friday, Penny Mordaunt, the former defence secretary, said the deal would help China 's ambitions. 'In atoning for our colonial 'wrongs of the past' Labour have enabled China's colonial future,' she posted online. 'The Chagos Islands 'deal' does not secure the base and it will impact military operations… It restricts where we can place maritime installations such as sensors, it requires we share our defence planning with Mauritius, it raises confusion over who will manage the electromagnetic spectrum. 'In trying to resolve a minor problem in the FCDO's in-tray they have created much greater ones both the immediate and long term.' Sir Iain Duncan Smith, the former Tory leader, said: 'This is a terrible agreement. Future operations will be in jeopardy and Mauritius will be able to interfere. A weak agreement from a weak government.' A Downing Street source said the figures had been signed off by the Government Actuary's Department. 'This deal is vital for our security and is opposed only by Russia, China, Iran and the Conservatives,' the source said.
