UK Government's £34.7 Billion Deal for Chagos Archipelago Sparks Criticism and Accusations

Strategic Insights -

The UK Government has agreed to cede the Chagos Archipelago to Mauritius in exchange for a £34.7 billion deal over the next 99 years. According to a freedom of information request to the Government Actuary's Department, the higher figure is a nominal amount, with the adjusted value being approximately £10 billion in today's money. The UK has agreed to retain control of the military base on Diego Garcia, despite concerns over its future in international courts and tribunals.

Key Takeaways:

  • The UK Government has agreed to pay £34.7 billion to Mauritius over 99 years for the Chagos Archipelago, with the adjusted value being approximately £10 billion in today's money.
  • Conservative shadow foreign secretary Dame Priti Patel accused ministers of trying to "cover up" the cost of the deal and using an "accountancy trick" to reduce the figure to £3.4 billion.
  • The Government used a Treasury principle, known as the "social time preference", to reduce the figure by between 2.5% and 3.5% per year.
  • Dame Priti Patel described the agreement as "a terrible deal with huge costs to hard-pressed British taxpayers" and accused the negotiating team of being "the worst team of negotiators in history".
  • The UK will retain control of the military base on Diego Garcia, despite concerns over its future in international courts and tribunals.

Statistics:

  • £34.7 billion: The nominal amount the UK Government will pay to Mauritius over 99 years.
  • £10 billion: The adjusted value of the deal in today's money.
  • 2.5-3.5%: The reduction in the figure used by the Government's accountancy trick.
  • 2003: The year the Treasury principle, known as the social time preference, was introduced.
  • 99 years: The duration of the deal.
  • 2025/26: The year used for inflation adjustments.

Sources:

  • The Telegraph, "We've all known it's a terrible deal with huge costs to hard-pressed British taxpayers" (Dame Priti Patel)
  • PA news agency
  • Government Actuary's Department
  • Treasury principle, social time preference
  • Freedom of information request

(PA Archive)