The Chagos deal is being fought on two different ledgers. One side quotes big cash numbers over almost a century. The other quotes present value in today’s money. Those are not the same claim. They are different measurement systems.
The Parliament treaty briefing states the government’s estimate is about GBP 3.4B over the 99-year term using a present net value approach, expressed in 2025/26 prices and verified by the Government Actuary’s Department. Separately, reporting has framed the deal as involving an annual payment in the ballpark of GBP 101M per year to lease the base back. The gap between “billions today” and “tens of billions over a century” is mostly inflation and discounting.
Why it matters
- Long-dated geopolitical agreements get attacked on price. The only defence is transparent math: nominal totals, inflation assumptions, and discounting.
- “Big numbers” can be technically true but misleading. Present value is the right lens for affordability today; cash totals are the right lens for future fiscal exposure.
- If the UK cannot explain the cash schedule cleanly, the treaty becomes a permanent domestic political target, increasing headline volatility.
Key numbers
- Duration: 99 years from entry into force, extendable 40 years by mutual consent.
- Government cost estimate: ~GBP 3.4B (present net value), in 2025/26 prices, verified by the Government Actuary’s Department.
- Cash framing in reporting: about GBP 101M per year (reported as an annual lease-style payment).
- Back-of-envelope: GBP 35B over 99 years implies ~GBP 354M per year on average in nominal cash terms (not discounted).
What to watch next
- Whether the UK publishes a clean “payment schedule table” (how much each year, what indexes it, and what additional funds exist).
- Whether opponents keep using nominal sums without discounting, and whether media coverage clarifies the difference.
- Whether treaty start-date uncertainty (entry into force timing) becomes part of the cost dispute.
Cost framing - at a glance
PV framing (today's money)
~GBP 3.4B
Government present net value estimate
Cash framing (over decades)
Can look like tens of billions
Nominal sums add up over 99 years
Key drivers
Inflation + discount rate + start date
Tiny assumption changes compound
High-signal test
Publish the schedule
If the cash path is clear, the optics risk falls
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