Keir Starmer is facing explosive claims he misled the British public after leaning on Britain’s budget watchdog to sell his controversial Chagos Islands giveaway, only for the watchdog to reveal it was never even asked.
The Prime Minister repeatedly suggested the £3.4bn price tag for handing the Chagos Islands to Mauritius was backed by the Office for Budget Responsibility, using the respected body as political cover for what critics have branded a surrender deal.
But the truth is far uglier.
The OBR has now confirmed it had no role whatsoever in assessing the cost of the treaty, was never contacted by the Treasury or the Ministry of Defence, and carried out no modelling of the figures Starmer was so keen to parade.
Despite that, Starmer told the public the figure reflected “how the OBR counts the cost”, a claim that now looks at best careless and at worst deliberately misleading.
When announcing the deal last May, Starmer insisted the handover would cost £3.4bn over 99 years, or around £101m a year. Pressed on the maths, he said:
“That [£3.4bn] is the net cost and the reason it’s put in those terms is because that is how the Government accounts for it, it’s how the OBR counts the cost, and it’s the way public sector projects are measured, in other words, what’s the net cost today, and that is £3.4bn.
“Obviously, over time with inflation then that is the net cost. But this isn’t a way of presenting it for the purposes of this particular project, that is the way the Government present and account for public sector projects, it’s the way the OBR takes account of them when they’re doing their assessments.”
Except the OBR says it did no such thing.
In a blunt response to Conservative questions, the watchdog said: “The OBR does not hold any information on the costs or financial impacts of the specific treaty over the future sovereignty of the Chagos Archipelago.
“We can confirm that we have not been contacted by HM Treasury, MoD or the Governments Actuary’s Department. As a result, we have not undertaken any modelling of these costs.”
That revelation rips the mask off Starmer’s careful presentation and revives fury over the true cost of the deal, which Government documents later showed could be nearly ten times higher than claimed.
An estimate from the Government Actuary’s Department put the real bill at £34.7bn in nominal terms, a figure quietly buried while Labour ministers trumpeted the far smaller headline number.
Dame Priti Patel, the shadow foreign secretary, did not mince her words. She said: “Keir Starmer is trying to mislead the public on the true costs of his £35bn Chagos surrender deal. It is disgraceful and dishonest that he has sought to use the OBR as a smokescreen, all while keeping the OBR itself in the dark.
“The Prime Minister may think he can get away with deceiving the British public, but it is becoming clearer by the day his surrender is a disaster for British taxpayers, for Britain’s security and for the Chagossian people, whom he has sought to silence throughout this process.
“Starmer has started the new year by talking about tackling the cost of living, yet he is taking cash from ordinary people’s pockets and handing it to Mauritius, an ally of China. Rather than hiking taxes, he should show some backbone, scrap this disastrous treaty and stand up for Britain on the global stage for a change.”
The row is particularly damaging given Starmer’s repeated attempts to cloak himself in fiscal responsibility while attacking others for loose accounting.
It also risks reopening wounds from a recent clash between the Treasury and the OBR, after the watchdog accused Rachel Reeves of misrepresenting the state of the public finances ahead of the Budget.
Despite the mounting evidence, the Foreign Office is digging in, insisting Starmer’s comments were “completely accurate” and “categorically untrue” to suggest otherwise.
Officials argue the cost was calculated using OBR inflation forecasts and approved by the Government Actuary, pointing to a letter from the UK Statistics Authority which said: “We have confirmed with the OBR that they believe that [the formula used by the Government] is a reasonable one to use when discounting the value of a lease.”
Critics say that defence is threadbare, noting the OBR itself had no involvement and other Labour projects have not used the same accounting trick, allowing ministers to inflate spending promises when it suits them.
Under the deal, Britain gives up sovereignty of the Chagos Islands while leasing back the Diego Garcia military base, a strategic asset used by UK and US forces since the 1970s.
The agreement has already suffered a setback in the House of Lords, where peers backed calls for renegotiation, delaying the process and piling further pressure on a Prime Minister increasingly accused of playing fast and loose with the truth.
For a leader who promised honesty and transparency, the Chagos saga is fast becoming a masterclass in spin, smoke and very expensive mirrors.
