Starmer’s Chagos Giveaway Could Cost British Taxpayers £47 Billion, Analysis Warns

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Keir Starmer’s agreement to hand sovereignty of the Chagos Islands to Mauritius could end up costing the British public as much as £47 billion, according to new research.

The Prime Minister has faced mounting criticism for what opponents describe as a “surrender” of the British Indian Ocean Territory. Dame Priti Patel, the shadow foreign secretary, warned: “Labour’s Chagos surrender deal will hit British taxpayers hard for the next century with billions being paid to fund tax cuts in a foreign country.”

She added: “Labour ministers have consistently misled the British people on the true costs and sought to cover up this appalling deal. Conservatives will keep fighting against this surrender of British sovereignty and Labour’s abuse of taxpayers’ money.”

An earlier Labour government estimate suggested the net present cost of the deal was £3.4 billion, while ministers dismissed alternative figures ranging from £9 billion to £18 billion as “absolutely wide of the mark.” However, The Telegraph previously revealed that internal calculations put the cost closer to £35 billion over the 99-year term.

Now, the TaxPayers’ Alliance claims the true figure could climb higher still, with their analysis suggesting the final bill could reach £47 billion, equivalent to roughly a quarter of the annual NHS budget or 14 new aircraft carriers.

Inflation Assumptions Challenged

The campaign group argues that the Treasury used a “highly optimistic” inflation forecast of 2.3 per cent when estimating costs. By contrast, long-term gilt yields imply that markets expect average inflation of around 2.9 per cent over the next century.

Darwin Friend, the group’s head of research, said:

“The grim reality for British taxpayers is that the Chagos surrender is likely to cost even more than has previously been revealed. 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. 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.”

With the projected costs now disputed, pressure is growing on the Labour Government to justify its decision. For critics, the £47 billion estimate underscores what they view as a costly concession of sovereignty.

The second reading of the Chagos Bill is due in Parliament tomorrow (9 September 2025).