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NextImg:Keir Starmer's Chagos 'surrender' deal could cost taxpayers £12bn MORE than feared

Labour's Chagos Islands deal could cost £12billion more than was feared, according to new analysis.

The "surrender" deal, signed in May, saw Sir Keir Starmer hand over sovereignty of the Chagos Islands to Mauritius while keeping the UK-US military base on Diego Garcia on a 99-year lease.

However, the Government has been accused of not exposing the true cost of the agreement, which the Prime Minister claimed to be £3.4billion upon announcing the giveaway £3.4billion upon announcing the giveaway earlier this year.

Figures from the Government Actuary's Department revealed last month initially calculated the agreement's cost at £34.7billion, in nominal terms.

However, fresh analysis by Taxpayers Alliance has now suggested the cost could be even higher, at £47billion.

The pressure group claims the Government estimated the value of future payments using inflation assumptions that "do not reflect market values".

It has called on Sir Keir to cancel the deal and "save the country from national humiliation".

Darwin Friend, head of research at the Taxpayers’ Alliance told The Telegraph: "Reeves’s inflationary economic policies mean that the Government’s estimates for inflation look to be highly optimistic given the market’s own forecasts as can be seen in gilt yields.


Pressure group Taxpayers' Alliance has called on the Prime Minister to cancel the Chagos Islands deal

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GETTY

“The Chancellor should be demanding that the Prime Minister urgently cancel this deal, saving the country from a national humiliation as well as helping to plug the fiscal black hole.”

Shadow foreign secretary Dame Priti Patel accused ministers of trying to “cover up” the cost of ceding the Chagos Islands to Mauritius, accusing them of using an “accountancy trick” to price the deal at £3.4billion.

Justice Minister Alex Davies-Jones however insisted this was the "true cost", adding that Labour "does not recognise" the projected £34.7billion figure.

She told GB News last month: "I want to be very clear with your viewers that we do not recognise that figure at all.

Under the Chagos Islands deal, the UK-US military base on Diego Garcia will be kept on a 99-year lease

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GETTY

"The Prime Minister has been has been forthright in saying that the true cost of this is that £3.4billion figure, it is less than 0.2 per cent of the defence budget, which is less than the cost of a of an aircraft carrier and all of that in order to keep national security safe.

"The United States are on board with this agreement to make sure that we can maintain that military base on Diego Garcia for national security.

"And we think that is that is what is needed in order to protect our British citizens."

A Foreign, Commonwealth and Development Office spokesman said: “The way the Government set out the cost of this deal has been worked out using the same method the government has used for decades.

Justice Minister Alex Davies-Jones insisted the 'true cost' of the deal was the £3.4billion figure

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PA

“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 £101 million per year, and the net present value of payments is £3.4billion – this is less than 0.2 per cent of the annual defence budget.

"The deal is supported by our closest allies, including the US, Canada, Australia and Nato.“