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The social media are buzzing with claims that Keir Starmer “misled” the public by saying the Chagos Islands handover would cost £3.4 billion, when “official figures” supposedly show the real cost is £35 billion.

The Daily Mail and The Telegraph have run with this angle, but the truth is more mundane — and less scandalous — than the headlines suggest.

The facts

Under an agreement with Mauritius, the UK will:

• Cede sovereignty over the Chagos Islands by the end of the year.

• Lease back the key Diego Garcia military base for 99 years.

• Pay £101 million per year for the lease.

That £101 million × 99 years works out to about £10 billion in today’s money if you just multiply the two.

But here’s the trick: if you don’t adjust for inflation, and simply add up all the payments over a century, you get a number closer to £34.7 billion — which is where the “£35 billion” claim comes from.

Nominal v present value

• Nominal total (£35 billion): This is just adding up every annual payment over the next 99 years as if £101 million in 2124 is the same as £101 million today. Economists consider this meaningless for budgeting, because £101 million in a century will be worth far less in real terms — likely less than £20 million in today’s purchasing power.

• Net Present Value (£3.4 billion): This adjusts all future payments to their value in today’s money using a standard discount rate (here, around 2.3 per cent inflation). This is how governments, accountants, and international bodies measure long-term spending commitments.

Both numbers describe the same stream of payments. The government uses the smaller one because it reflects real cost today — the larger one is an unadjusted sum that inflates future costs massively.

Why the £35 billion figure is misleading

1. It’s not “new” money — it’s the same lease payments Starmer already disclosed.

2. The bigger number ignores inflation, making it look like we’re paying far more than we actually are in real terms.

3. Government accounting always uses present value for long-term deals; to switch to nominal totals here would make any century-long contract look absurdly expensive.

The politics behind the row

The £35 billion figure is useful for critics because it sounds shocking — ten times the government’s stated cost.

The government prefers the £3.4 billion figure because it’s standard practice and makes the deal look proportionate.

Neither side is lying about the maths, but the nominal figure being pushed on social media is being used as a political weapon rather than a genuine measure of cost.

The bottom line:

The Chagos deal still costs the UK about £101 million a year, exactly as stated.

The “£35 billion” claim is just the undiscounted sum of those payments over 99 years — a number that sounds scandalous, but isn’t a meaningful measure of real cost.

The total to be paid will be £3.4 billion in today’s money. Money loses its value over time, meaning the amount the UK gives Mauritius will be worth a lot less by the time the payments finish.

The news sources and their amplifiers who are using the £35 billion figure will be aware of this – or ought to be – so it seems likely they are deliberately trying to mislead you.

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