Diego Garcia Military Base and British Indian Ocean Territory Bill

Debate between Baroness Noakes and Lord Horam

Report stage
Monday 5th January 2026 Lords Chamber

[Lord Horam (Con)]

My Lords, briefly, I support the remarks made by my noble friend Lord Callanan, and I particularly support his Amendment 47. I also support Amendment 50 from the noble Lord, Lord Purvis.

The scrutiny of this Bill by the House of Lords has been excellent, far better than in the House of Commons. What struck me, as an economist, is that this is a terrible deal. It is not just terrible; it is an absolute shocker. First, I strongly support the £40 million towards a trust fund for the Chagossians. As has been said repeatedly throughout these debates, they have had a terrible deal over many years from all Governments, and I do not begrudge a penny of the £40 million and the arrangements that have been mentioned. I am reassured by what the very capable Minister has said about that during the course of our debates.

Secondly, of course, that is small beer by comparison with the £3.4 billion or £34 billion, as my noble friend Lady Noakes pointed out earlier in the debate, which is the compensation—up to £34 billion of it—for the use of this particular site. Remember that in the original deal in 1965, conducted by Harold Wilson, the then Prime Minister, there was compensation paid. When he said, in effect, to the Mauritian Government, “You can have your independence, but we wish to keep Diego Garcia and the Chagos Islands”, he gave them £3 million in compensation. We may sniff at £3 million in 1965, but that is £75 million to £79 million in today’s money, which is very considerable compensation. Therefore, I do not see why any further compensation of billions of pounds should be paid to the Mauritian Government.

Thirdly, the treaty stipulates that the Mauritian Government will get £45 million a year for 25 years in development aid. I have been to Mauritius twice—first in a parliamentary delegation and, secondly, as a private citizen. Mauritius is a hugely successful country. My noble friend Lord Deben may castigate its environmental qualifications, but economically it is extremely successful. It started out over 50 years ago with an agricultural economy as a producer mainly of sugar. It then diversified into business, supplying Marks & Spencer, Waitrose and other sorts of companies in this country. It then went into high-end tourism, which was extremely successful, as I personally experienced on my second visit. In addition to that, it is now a big financial centre. Terry Smith, one of our biggest investment advisers, lives there and runs his entire investment empire from Mauritius, because it is a suitable place to do so—what a lovely place to run an investment company from.

All of this has contributed to Mauritius, along with the Seychelles, being the outstanding economic performer among all the African countries; for some absurd reason, it is bracketed with the African continent. Mauritius and the Seychelles are more successful in terms of GDP per head than Egypt, South Africa and Nigeria—and all the other countries—yet we are giving them development aid. That is absolutely incredible. Money can be spent only once; if it is being spent on this, it is not being spent on the NHS. The Government maintain that they are putting the people of this country first, yet they are spending billions of pounds overseas quite unnecessarily. My noble friend Lord Callanan is absolutely right to seek to have this investigated. In fact, in my view, there is a reason why this particular treaty should not be ratified unless we have gone down that path; we certainly should have much greater transparency around its economic and financial consequences than we have already.

[Baroness Noakes (Con)]

My Lords, I was tempted to come and do another forensic analysis of the financial aspects of the treaty, but I will restrain myself and just speak briefly in support of all of the amendments in this group.

As we heard from my noble friend Lord Callanan, the Government like to talk about an average of £101 billion a year, in 2025-26 prices, and the total cost being £3.4 billion; that is discounted using the social time preference rate. All these figures ignore the cash that is going to go out of the Treasury’s coffers and into Mauritius’s coffers. All these amendments are trying to do is get the focus back on cash because, at the end of the day, cash is what is important. It is cash that will end up in the Government’s accounts. It is cash that will be leaving our economy.

Amendment 39 would require a schedule of the amounts likely to be paid, which would show no single year in which £101 million will be paid—it will always be more than that—and would show that the total will be not £3.4 billion but closer to £35 billion. It would also show that, in the first five years, the cost will be nearly £900 billion; of course, that is a really big sum of money in the context of a cash-constrained Budget. I note in particular that Amendment 50 in the name of the noble Lord, Lord Purvis of Tweed, would ask for that schedule to be updated every five years. This is also very important because inflation expectations can vary. For example, if there were just a small inflation spike, as occurred in 2023, you could change the overall numbers by £1 billion or £1.5 billion; that is a very modest assumption.

It is really important to keep a strong focus on cash and not to talk in these funny money terms, which try to divert attention from how much money is really involved.