Full Breakdown
Labour’s Chagos Islands Deal Faces £288 million Cost Rise and US Opposition
9/9/2026, 2:18:41 AM
Labour’s Chagos Islands Deal and Revised Cost Estimates
The UK government plans to transfer sovereignty of the Chagos archipelago to Mauritius while leasing back the Diego Garcia air base for 99 years. Under the original terms, the lease would generate about £101 million per year, amounting to roughly £34 billion in nominal payments. A Freedom of Information request revealed that Treasury calculations now show the lease cost rising by £228 million—an 8.5 percent increase—bringing the total projected outlay to £3.68 billion, up from £3.39 billion. Labour leader Sir Keir Starmer has cited a £3.4 billion figure after discounting, while critics argue that, without any discount, the liability could exceed £35 billion.
Treasury Discount Rate Reform Drives Higher Payments
Chancellor John Healey announced a change to the Treasury’s “social time preference rate” (STPR), lowering the discount from 3.5 percent to 3 percent. The reform reduces the annual discount applied to long-term investments, meaning future lease payments are valued more heavily today.
UK Government Stance and Parliamentary Debate
Prime Minister Andy Burnham discussed the issue with US President Donald Trump, though a No 10 spokesman said the conversation also covered the Ukraine war and the Middle East. Burnham’s position is described as “difficult,” balancing the need to avoid legal challenges from Mauritius against strained US relations.
US Opposition and Emerging Diplomatic Strain
President Donald Trump labelled the transfer an “act of great stupidity” and later called the deal “terrible,” suggesting the United States may withhold support on related sovereignty matters such as the Falkland Islands. The dispute is expected to surface at the United Nations General Assembly, where Mauritian officials plan to pressure Burnham to honour the agreement.
Verbatim Quotes
“The Jew hate of their government knows no boundaries and knows no facts.” — Gaza. Mr Huckabee
