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PaperclipPerfector  2d ago (text post)   8692 thread views

Culture War Roundup for the week of August 11, 2025

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I'm not sure whether this counts as culture-war material, but it definitely is political, and I found it extremely interesting.

Daily Telegraph (found via Breitbart):

Revealed: Chagos deal to cost 10 times what Starmer claimed

Sir Keir Starmer’s Chagos Islands deal will cost 10 times more than he claimed, official figures reveal.

The Government’s own estimate of the cost of giving away the British Indian Ocean Territory to Mauritius is almost £35bn, according to documents released under the Freedom of Information Act – far higher than the £3.4bn figure Sir Keir has previously used in public.

Labour ministers now face claims that they misled Parliament and the press with an “accountancy trick” to hide the size of the bill from taxpayers.

An official document produced by the Government Actuary’s Department shows the cost of the deal was first estimated at 10 times Sir Keir’s figure, at £34.7bn, in nominal terms.

The UK will pay £165m a year to rent Diego Garcia for the first three years.

The rent payments will then be set at £120m a year, increasing in line with inflation from year 14.

The document shows that civil servants were first instructed to lower the cost of the deal on paper to £10bn, to account for an estimated annual inflation rate of 2.3 per cent over 99 years.

Then it was reduced again by between 2.5 and 3.5 per cent per year using the Treasury’s Social Time Preference Rate, a principle that money spent immediately has more value than funds earmarked for future spending.

The final figure was calculated to be 90 per cent lower than the cash value of the payments the UK will make to Mauritius over the next century, in what critics say was a deliberate attempt to mislead the public.

Writing for The Telegraph, Dame Priti Patel, the shadow foreign secretary, said: “Instead of owning up to the costs, Labour have used an accountancy trick to claim the amount was only a mere £3.4bn.”

Foreign Office sources insisted ministers had used a “standard” calculation for long-term government spending, and denied accusations that it was part of a “cover-up”.

However, other projects announced by Labour have not used the same method, which has allowed ministers to advertise higher spending on popular policies. Angela Rayner has since launched a 10-year affordable homes plan that included inflation-level increases in government spending as part of the cost of the policy – a method not used with the Chagos deal.

I'm getting flashbacks to my Engineering Accounting class in college. Calculations in this vein definitely are used on a regular basis for cost–benefit calculations in engineering. And a long-term discount rate of 5–6 percent certainly sounds reasonable to me. But, if discount rates are being used selectively rather than uniformly, that indeed would count as an "accountancy trick".

one wonders if they are using the same social time preference rate when calculating the costs of global warming in the future vs the costs of preventing global warming in the present. my understanding is the Stern Report used a discount rate of around ~1.5%. So that seems kind of suspicious that they are using a discount rate of between 2.5 and 3.5% here. however, the difference in rates is not super large. I think if they used a Stern rate it would increase the present value of the payments by a factor of 1.4 (where 1.0 would be the same value) compared to the rate they used.

also, whether it was misleading or not I think depends on how it was worded. If they said something like "the cost of the deal is 3.4 billion with payments over 100 years" then I think that is misleading because it gives the reader the impression that the payments are going to be something like 100 payments of 3.4 billion / 100 and a reader might think the net present value will be much lower. If you did not want to mislead the reader you would use more explicit wording like: "the net present value of the payments is 3.4 billion and will be paid over 100 years". My guess is the wording will just be standard wordcel games where you try to put false impressions in the heads of other people and then later claim the reader is at fault. I guess its also completely possible that all of the detail was shared with parliament but no-one in parliament actually reads the detail.

i've read the telegraph article and part of the article is written by the shadow foreign secretary priti patel. it seems like everyone knew what the cash value of the payments were all along but did not know how the treasury were calculating the final cost. i think in this case its hard to claim that treasury were that misleading. treasury should have explained originally how they came to their present value calculations but it's not like the value of the cash payments was hidden.

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