Lord Hannan of Kingsclere:

Moved by Lord Hannan of Kingsclere

5: Clause 1, page 1, line 7, leave out subsection (2) and insert— “(2) Sections 2 and 4 of this Act do not come into force until the duties outlined in sections (Equality Impact Assessment) and (Implications of treaty on United Kingdom defence spending and United States of America) are discharged.”

My Lords, I beg leave to move the Amendment standing in the name of the noble Lord, Lord Morrow.

The financial aspects of this Bill are the easiest for people not involved to understand. It does seem bizarre that at a time when we are borrowing money and scratching around for savings, we are raising taxes here in order to fund tax cuts in Mauritius. I do not want to detain noble Lords, so I will not go over the figures again. We had an expert disquisition from my noble friend Lady Noakes at Second Reading.

Even if we were to accept the Government’s figures, we still face an immense imbalance in where the money is going. I come back to the point that we were making just before dinner, about the wrong that everyone accepts was done to the Chagossians and what restitution would look like. The Minister said they had been very badly treated. Well, badly treated or otherwise, their compensation, if we measure it purely in financial terms, comes to a one-off £40 million settlement for good—whereas, even on the figures offered by the Government, we are paying Mauritius £101 million every year for the next 99 years. Who is the wronged party here? How is it that having done this harm to population A by moving them, we then reward the population that is in fact making permanent their exile and deepening their sense of grievance?

Never mind whether it is £3.1 billion, £35 billion or somewhere in between, at Second Reading my noble friend Lord Altrincham made the point that this is money being sent out of the country. We can argue about whether there is merit in Governments spending cash here to stimulate growth. I personally am of the camp that says it does not work. It is better to leave that money directed by people who are attached to it; they spend it more wisely and the growth impact is much higher. But I will allow that there is some impact in stimulating the domestic economy, even when a Government spend money badly. There is none at all when you just take a sum of money and send it several thousand miles away, which is what is being proposed here.

The amendments from the noble Lord, Lord Morrow, are about impact assessments, particularly on the financial consequences for the United States, as well as for us. I just want to tackle the view that this is a great deal for the US—that, however inconvenient it is for us, we are left with the bill and the US gets to keep the base. Every pound that we send to Mauritius to lease the property that we currently own is a pound that we are not spending on defence. It is a pound taken away from NATO and from the western alliance. That is just the immediate and direct cost of what happens when you take a freehold and then decide to pay for it as a leasehold.

There is then, it seems to me, an underexplored indirect cost: how have we now incentivised future Mauritian Governments to monetise this territory? If they can get this sum of money out of us, why not lease other parts of the archipelago to other powers? The Minister has said, of course, that in the treaty they are not allowed to for military purposes. The treaty says they cannot use these things for defence purposes, but I wonder: down the line, if Mauritius was indeed incentivised to make more money and leased an island for supposedly civilian purposes, then very gradually it was turned in a secret way by an unfriendly power into a more direct military installation, is that something realistically that is then going to trigger a military reaction from us?

It seems to me that the only way of ensuring that we do not have unfriendly neighbours in the Chagos Archipelago is not to have these islands being leased out in the first place, and the best way of preventing the islands being leased out is to hang on to them ourselves.

The noble Lord referred to £40 million. I assume he is referring to the trust fund that is going to be set up.

Yes.

However, as he is fully aware, that is totally in the hands of the Mauritian Government. No Chagossian from here can access that money. Is that not something that should be considered?

I am very grateful to the noble Baroness for that important correction. This would not be the first time this has happened. The sums that were disbursed to Mauritius in the 1970s, supposedly to be spent on the welfare of the Îlois exile community, were hung on to. They were disbursed very late, and their value had been significantly eroded by inflation in the meantime. Indeed, given that record, there is little wonder that there should be bad feeling from a lot of Chagossians towards the Mauritian Government.

Unusually in this House, the noble Baroness and I were on the same side in the 2016 referendum, so we are familiar with the argument that here is a little bit of your money back; we are spending it for you, and you should be grateful. It was an unconvincing argument to the British people in 2016, and I think it will be an unconvincing argument to the British people and to the Chagossian portion of the British family in 2025. I beg to move.

My Lords, I will refer to Amendment 24 in my name. I thank the Minister for her gracious remarks earlier in the debate. I can assure the Committee that I will not detain it as long this time. The amendment asks a simple and poignant question. Should the British taxpayer be compelled to fund a treaty that actively undermines our position on the international stage and erodes British sovereignty? I believe the answer is as simple as the question: no.

Article 11 of the treaty places the United Kingdom under financial obligations to Mauritius, including annual payments linked directly to the transfer of sovereignty. We are being asked to underwrite, year after year, a settlement that has not been endorsed by the people most deeply affected. In 2008 the Foreign Affairs Committee noted the “profound poverty” experienced by many Chagossians resettled in Mauritius. The United Kingdom Government have recognised the “hardship and suffering” caused by their displacement in the preceding years.

At a time when families across the United Kingdom are struggling with the cost of living, when public services are stretched and defence spending is under pressure, the Government are willing, and obliged under this treaty, to transfer British funds overseas in exchange for the honour of relinquishing sovereignty over a territory that hosts one of the most strategically important military bases in the world. Why would we pay for an island that we already own?

Without the inclusion of this amendment, we will be in the extraordinary position of financing, on an annual basis, a settlement that ultimately advances arguments that have repeatedly undermined British sovereignty. That is why this amendment is undeniably crucial. It protects not only the taxpayer but the constitutional integrity of this country, as well as relegating the overindulgent aspirations of the Mauritian Government, depriving them of even more British taxpayers’ money.

Let us also consider the native islanders—the Chagos people. Have we ever paused to consider how they might feel as this Parliament considers whether we should pay a foreign Government to take control of a territory in which they have never had a stake, all while ignoring the cry of the Chagos community in the UK?

Beyond that, there is also the question of accountability. Once these payments begin, Parliament loses direct control over how they are to be spent. There is no binding mechanism in the treaty to ensure that the native community will be benefited by these payments in a meaningful way. This arrangement risks repeating the injustice of the past, where funds provided in earlier decades did not reach the displaced communities in Mauritius who were living in poverty. Surely, we must learn from that history and not repeat it. That is essential.

I therefore believe we should not rush into binding financial commitments when so many broader questions remain unresolved—about self-determination, defence co-operation, the protection of strategic assets, and long-term political stability in a region where global competition is increasing and where the UK needs to be assertive and confident. The British taxpayer should not foot the bill for decisions that diminish our sovereignty and overlook the rights of sovereign British citizens. For these reasons, I commend my amendment to the House.

My Lords, I support the amendments in this group, and I want to speak to my Amendment 23. Before I go into that, the noble Lords, Lord Hannan and Lord McCrea, have put very clearly just how ridiculous it is that we have a territory that is ours and now we are paying to give it away. The whole thing is just such nonsense. I understand, as we all do, the security implications of Diego Garcia, but it is just inexplicable how this could not have been handled differently. Some noble Lords listening to the debate might well be feeling that this is definitely going to end in tears.

It is also very disappointing, particularly for the Chagossians who have sat here all evening—while we had a break as well—to see so few people here. There is one Back-Bencher from the Labour side, one Cross-Bencher, no Lib Dems at all now apart from the front bench, and a number—there should have been a few more—from the Conservative side. I am disappointed by that, and a lot of people should feel a little ashamed that those Chagossians have sat here all evening, listening to their future being decided with so few people listening.

My amendment would require the Secretary of State to publish a report assessing the financial implications of the treaty for the United States of America and the United Kingdom, including the effect on NATO spending and the risk of global instability from uncontrolled leasing of islands. One of the main arguments the Government have advanced for the Bill before us—and for the treaty, which will be ratified if this Bill gets Royal Assent—is that the Americans strongly support the treaty and believe it provides the legal certainty they desire. The purpose of Amendment 23 in my name is to probe the downsides, as well as any potential upsides, to ensure that His Majesty’s Government can fully advise the Trump Administration of both.

There are three critical respects in which I do not believe that the Bill and the treaty are in the interests of the United States. Indeed, I would go so far as to say that they are profoundly contrary to the interests of the United States. It is plain, as we saw from the debate earlier, that the treaty will not be able to provide legal certainty, because it is contrary to international law on self-determination and the Ellice Islands precedent. The legal issue is not going to go away, because we will be signing a treaty if this Bill goes through. However, the points that I want to focus on relate to the costs and international peace and stability.

First, we have to make the point about the cost. This represents a huge sum that, if given to the Republic of Mauritius, cannot be spent on UK defence. The key point is that we must assess the benefit arising from the United States not having to pay for the lease of the islands in light of the fact that, under the current arrangements, we do not charge them anything to lease the islands either, and we do not charge ourselves for the islands because, of course, they are held under UK sovereignty.

In entertaining the Mauritius treaty and the Bill before us today, the United States would be acquiescing in an arrangement that means a lot of money going to the Republic of Mauritius that could otherwise have been invested in NATO defence. In some ways more troubling is the fact that the provision of this huge sum for one island creates an incentive for the Republic of Mauritius to seek to lease other islands for similarly large amounts of money. We know that it cannot resettle the islands because it does not have the capacity to go there to set its flag on them, and it has had to ask India to take it there for that purpose. In the context where resettlement may not be a possibility, the transfer of 60 islands of great geo-strategic importance from a nuclear power with a navy to a small country that does not have the capacity even to get there under its own steam creates a power vacuum in a very sensitive spot. Of course, the United Kingdom and the USA will remain on Diego Garcia, but, crucially and unlike at present, without sovereignty over a single island, including Diego Garcia.

Such is the lure of a vacuum in power politics that even when the treaty has not been ratified and may never be ratified, other states have already started circling. On 30 October, www.shippinggazette.com published an article entitled “India secures defence foothold on Chagos Islands”. It states:

“India has reached an agreement with Mauritius to establish a satellite station in the Chagos archipelago, a move seen as enhancing its strategic presence in the Indian Ocean, reported Fort Lauderdale’s Maritime Executive.

Indian media said the station will track satellites and serve as a regional monitoring asset, a term often associated with signals intelligence. The exact location is unclear but is expected to be near the Diego Garcia US-UK base.

The facility is likely to mirror India’s installation on Agalega, another Mauritian island, which India has effectively annexed. Mauritius relies heavily on Indian support and functions as an offshore financial centre for India”.

Perhaps we do not need to worry too much about India—but then, maybe we should. This is completely inevitable, just as it is completely inevitable that other powers will seek to gain access to other islands.

I cannot substantiate the report, but it was widely circulated that a large Chinese delegation arrived in Port Louis immediately after 22 May, when the Mauritius treaty was signed. The provisions of this treaty invite international instability where previously peace and concord have prevailed. Thus, not only does this treaty not meet the interests of the United States by taking huge amounts of money away from defence, but it uses that money to provoke global instability where previously there was none. The report prompts key questions for both the United States and Parliament. Given that the India-Mauritius listening post deal has apparently already been done, when did His Majesty’s Government provide their consent under paragraph 3.d of Annexe 1 to the treaty? More importantly, why did they offer their consent? I hope the Minister will be able to answer that. The Government had no business doing so, because this treaty has not yet been ratified. Are we confronting a situation in which the Republic of Mauritius did this deal with India without seeking UK consent, in direct violation of Annexe 1? If they did act in this way, they have already provided us with an object lesson in how the assurances provided by this treaty, such as they are, are in fact worthless, making it very clear why we should not be ratifying the treaty.

It is hard to conceive of a treaty less in the interests of the United States than the Mauritius treaty. It would be much better served if we were to afford the Chagossians self-determination, with the options of becoming part of Mauritius or what they say they want to be, a British overseas territory. That would be a win-win all round. The Chagos Islands, as has already been mentioned, could be resettled for less than the leasing bill to Mauritius for one island. In so doing, we would be taking the step that we should be taking to try to right the appalling wrongs of 1968 to 1973, which the Government continue to say were appalling. As the direct result of self-determination, the arrangement would bring legal certainty, just as did the separation of the Ellice Islands from the Gilbert Islands. Moreover, legal certainty would be provided in a context where all the islands, as a self-determined British overseas territory, would remain under British sovereignty, avoiding the power vacuum instability that is already being created by this Bill and the Mauritius treaty, with all that that means for international peace and stability.

My Lords, it is always a pleasure to follow the noble Baroness, not least because my Amendment 59 comes from a similar position to her Amendment 23, in that it is a probing amendment. Indeed, looking across the range of amendments in this group, there is a considerable similarity between them; they all come from a similar spirit.

The amendments in this group, including mine, reflect two particular anxieties and concerns with the Bill. First, there are the overall financial implications and the concerns that have been raised in relation to them. My amendment specifically looks at the financial implications for defence. Secondly, given that a number of the amendments seek for the Government to produce an assessment or report, there is a concern that we want to get clarity and full transparency from the Government on a range of financial matters. My amendment deals with both those concerns.

On the issue of finance, we have already debated the transfer of sovereignty to Mauritius, which is proposed by the treaty and the Bill. A number of us have expressed our deep Opposition to that, but this is not simply a case of handing over sovereignty to Mauritius. We are not simply giving sovereignty to Mauritius; we are paying Mauritius to take the Chagos Islands off our hands. That, in and of itself, shows one of the problems with the Bill.

We have seen in black and white the figures for the various payments that there will be, and the range of different assessments of what this deal will cost the taxpayer overall over its lifetime. The Government put it at the lowest level, with a GDP deflator, at around £3.4 billion. I think the cash terms are around £13 billion. The Opposition have indicated their assessment, with inflation, at £35 billion. I know that, in Another place, one of the other parties not represented in this House gave an assessment that it would end up being around £50 billion, so there is a very wide range of cost.

However, one thing we can say with a level of certainty, as indicated by the noble Lord, Lord Hannan, is that this is money flowing out of this country that cannot directly benefit this country. If we make a presumption, which I will come to in a moment, that this is, in effect, defence spending then it is not simply money that cannot be used for the overall benefit of the UK; in defence terms, it is an opportunity cost. It is not simply something that is additional to the Bill, but money that cannot be spent on other things.

Across the lifetime of this deal, whether we assess it at £3.4 billion, £35 billion or whatever figure you place on it, there will be real terms consequences for defence. It may seem a relatively small amount compared with what we will spend on defence over that period, but I will give a few examples from a defence point of view. The Type 26 frigate programme comes to about £8 billion, the “Queen Elizabeth” class carriers cost about £6.2 billion in total, and a single F35 fighter costs about £80 million. All those things are being taken away. Whatever money is assessed as the current value of our contribution to Mauritius via this deal is money that cannot be spent in this country.

Finally, this again comes to the point about trying to seek a level of transparency. There is a level of dispute over how much we are spending and how we assess it, but there is also a lack of clarity about the budgets that money comes from. I think there are three possibilities. Is this money, in general, coming out of the Foreign Office budget? Is it more particularly, under that category, money that will be deducted from what would otherwise be overseas aid, or is it coming from the defence budget? The purpose of my amendment is to probe that and try to gain some clarity and transparency from the Government about not simply how much we are spending but where it is coming from.

I thank the Minister for her patience in hosting this Committee. I will comment on my Amendment 52 and the other amendments in this group with specific reference to the financial agreement, where there seems to be ambiguity regarding the cost of this project. There clearly has been some ambiguity in the supervision of the contract, which may be because of the prerogative and lack of parliamentary participation, but this is a very large financial commitment to slip through under the prerogative and it is reasonable that we take a hard look at the contract itself in Parliament. That is why my amendment suggests that it goes back to the House of Commons.

The contract provides for two kinds of payments. It provides for 13 years of fixed payments of £2.3 billion. That is the easiest part of the contract to understand. If noble Lords wish to think of it in present value terms they might be a bit less than £2.3 billion, but those payments are nevertheless fixed and there is a schedule for when they are paid, albeit the Government appear to have offered the Republic of Mauritius the possibility of accelerating those payments.

Those payments take us to year 13. At year 14, the contract is linked to inflation. From here on, the payments are not just unknown but uncapped. That is a remarkable thing for the Government to offer. From year 14, the payments increase with inflation. No one knows what that will be; it could be very large. Therein lies the ambiguity in the approach to how much money is at stake: it is because the Government are offering the Republic of Mauritius the remarkably valuable asset of exposure to UK inflation from years 14 to 99. This is an almost unheard of contract. Incidentally, it is the same kind of financing error that His Majesty’s Treasury has made in linking so much of our gilt issuance to inflation. This itself has been the financial constraint on the Chancellor in recent months because of our exposure to the linkers, which have all moved up with inflation. It is an error that the Treasury has made before, so why is this contract linked to inflation?

I will take a look at what that actually means. The important numbers are the actual numbers that will be paid—nominal numbers—so let us not worry about the inflation adjusted and present value calculation. The actual numbers are those that will have to be funded by taxpayers in the future. If we go from year 14 and imagine a world of 2% inflation for the rest of the century, the Government will have to fund the Republic of Mauritius another £28 billion. At 3%, they will be funding £50 billion. At 4%, it will be £90 billion and at 5% it will be £174 billion.

Where do we go with these numbers? What do they really mean? How can we be comfortable with this kind of exposure? The first answer is that it is a very unusual kind of contract; it has no cap to it and provides enormous exposure to the UK over time. But in terms of just rough numbers, what does that mean? Trading in UK inflation through the gilt market indicates that, for the next 30 years, UK inflation will be around 3%, so it may be at the lower end. But if you look at other examples of where UK inflation has been over the last 100 years, there really are no suggestions that it is below 5%; it is more like 6% or 7%. Remember, it was over 10% only a couple of years ago and over 20% in the 1970s. Rolling forward at 100 years above 5% is probably a reasonable place to be.

Let us take it to be in the 3% zone, which would be very low and benign for the Government. If we then take one of the present-value calculations, we find that there are no scenarios in which this contract is worth less than £15 billion—and at £15 billion it is still uncapped: it is not as if it has been hedged, financed out or closed out in agreement with Mauritius. It still leaves the Government with all the exposure, so it is a remarkable contract in that form.

Having touched on inflation, my second question is therefore: did His Majesty’s Treasury agree the terms of this contract? It is important for us to hear that, because it may have been negotiated by a couple of other ministries, which may not have been aware of the financial exposure in the contract. At Second Reading, the Minister helpfully responded to our question about the value of the contract by saying that its total cost would be £3.4 billion. This is a reference to the present-value calculation in the Explanatory Memorandum, where the Government calculate a present value of £3.4 billion. There are no economic circumstances in which that can be true, but even if you are a believer in it, remember that it is uncapped, so it is one of those hopey-hopey things. It might be worth £3.4 billion but the payments might still be much greater in the future, because we have uncapped exposure.

For that reason, I suggest we look a little harder at this contract. There may be a difference between ministerial or government intent—the Government’s understanding —and the contract. They are not necessarily quite in line. It could be that the Government wish to pay the Republic of Mauritius an amount in the zone of £3.4 billion. Clearly, that is controversial: some people do not believe that there should be any payments. But let us just assume for a moment that the Government wish to pay an amount of that type. Unluckily—we made this point before, but it is important—the contract does not reflect that. It is not a contract that reflects an economic agreement of that type; it reflects a much higher level of expenditure by the UK towards Mauritius.

I conclude by saying that, on these terms, the contract as currently presented appears to have an error in it. It is not quite what the Government expect. It is not quite what the Government think is happening or what they have justified. It is, in some ways, quite a reckless contract. It is quite outside what the private sector could do and quite beyond what the private sector could hedge. You can only get hedging against inflation up to 30 years: that is the only extent to which you could even purchase protection from this contract. It means that, economically, we are committing to something that is completely unusual in leases and other contracts around the world, and the Government will be left exposed. On that basis, I therefore suggest that it needs one more check in Parliament, just on the financial terms of the contract, to be sure that it is what the Government really expect and understand.

My Lords, I will speak to Amendment 53 in my name and that of the noble and gallant Lord, Lord Houghton of Richmond, who unfortunately cannot be here this evening. It is clearly a probing amendment to give the Committee an opportunity to consider the implications for the UK of another possibility affecting Article 11, the economic partnership of the treaty. That possibility is that, within the 100 years-plus of the treaty, the Diego Garcia military base might become unusable, due to natural causes or because of a sea level rise triggered by global warming. While the loss of use would have military consequences, due to the wording of the treaty the UK’s financial obligations to Mauritius would appear not to be affected.

As I mentioned at Second Reading, the treaty makes some valiant assumptions about the steadfastness of relationships between the countries concerned. That aside, it would be helpful to understand why, if only as a precautionary principle, no mention of this possibility —the functional failure of the base—or how it might be handled is covered in the treaty. I assume that the possibility was considered by His Majesty’s Government and the United States in their preparations for negotiation. Can the Minister confirm this? Was it decided, based on historical records, that the risk of an earthquake, tsunami or other natural cause was so remote that these need not be considered?

Indeed, in his response in the debate on 30 June, the Minister mentioned that, like all small atoll islands, it is naturally dynamic. While not wishing to speculate on future erosion, he said that scientific surveys had concluded that the overall natural land area of the island had decreased by less than one per cent over the last 50 years. But what about sea level rise? There is a widespread presumption that sea levels will rise in the future. The amount of rise, its timing and spread in the world’s oceans is still speculative, but, based on realistic IPCC global warming projections, estimates for the Chagos atoll indicate rises that would impact on the functioning of the Diego Garcia base. They suggest that, within 100 years of the treaty, the runway and hard standings will not be covered, but some of the domestic and fuel storage areas could become submerged, either intermittently by diurnal tides or on a permanent basis. There could also be difficulties with quayside berthing and the present availability of fresh water. This is but a résumé of findings that were sent to FCDO officials in January, before the treaty was signed in May this year.

Maybe the United States, having done its own assessment, believes that it will be possible gradually to strengthen the sea defences as necessary to maintain the base’s operational capabilities. It would be helpful if the Minister could indicate what assessments the United States has made of sea levels. Looking at the wording of the treaty, as I mentioned at Second Reading, there will be the opportunity to attempt to resolve any issue about payment by the arrangements for settling disputes contained in it. But, whatever arrangement might be accepted by both parties today, it does not follow that the same consensus might be possible later, due to changes in the individuals and their perceptions then. There seems therefore to be good reason to have an agreement with Mauritius now, before ratifying the treaty, on how the eventuality of the base becoming unusable would affect Article 11.

My Lords, I rise very briefly to commend the noble and gallant Lord on his Amendment. It is an incredibly sensible amendment that should not be contentious because, if there are difficulties arising out of natural causes or disaster, it would be unthinkable for His Majesty’s Government to have to continue to pay large sums of money to the Government of Mauritius. I hope that that will be taken on board.

Secondly, I will refer to the treaty, which, at Article 11, talks about the economic partnership between the United Kingdom and Mauritius. There are three parts to that. The first is the annual sum that has to be paid: there has been lots of conversations around what that is and what it might amount to. The second is the trust fund, which the Minister knows I take a particular interest in and which we will discuss in the eighth group of amendments. The third is the multiyear funding as part of a development framework for projects to be undertaken by the Mauritius Government across 25 years. We have heard very little about this multiyear funding. I wonder whether the Minister could elucidate that and give us some details in relation to what that is and what it is thought to be. In the treaty, it says that the amounts, payments and modality for all those three issues will be agreed separately. So it is important for the House to have some clarity in relation to that and I look forward to hearing from the Minister.

My Lords, I was going to say that this has been an excellent debate, but it has not really been much of a debate seeing as nobody from the Labour side has bothered to get up and try to defend the Government’s actions on this matter. Not even the Foreign Office trade union crowd on the Cross Benches have come along to justify the Government’s actions on this. I note from the media reports that apparently the Mauritian AG is in London for discussions, no doubt to celebrate his brilliantly successful negotiation. He will probably find that the Foreign Office has given him another £100 million today for his trouble in coming over here in the first place.

It would not be right for me to begin my contributions without mentioning the excellent forensic speeches of my noble friends Lord Altrincham and Lady Noakes at Second Reading. It seemed to me very convincing that the Government have increasingly got their numbers wrong. I look forward to the noble Baroness attempting to explain her financial figures again.

I am sure that some noble Lords will argue—maybe the noble Lord, Lord Purvis, will—that this agreement has been made and there is nothing we can do about it. They might say that it is an unfortunate oversight, but we cannot change the agreement. However, the treaty, as we have discussed previously, has not yet been ratified; it is not final. The Government could still change their approach. It is unlikely, and it would take political will, but everything is possible.

Now that we know that the treaty is not inevitable and that the overall cost expected when the agreement was reached was wrong, I hope Ministers will take the opportunity to reconsider. In any other walk of life, a decision-maker faced with a significantly higher cost than expected would reassess their position. Why are Ministers failing to take that responsible approach with taxpayers’ money? The Chancellor will get up next week and tell us that the country is bust, and that we need to raise taxes and cut spending, but the FCDO seems to take no account of the extra costs when negotiating this agreement.

My Amendment 22 would require a review of the overall financial cost of the agreement. With such uncertainty about the overall costs, I think this is an entirely reasonable amendment that would give greater transparency to taxpayers on how much of their money will be sent to Mauritius, over time, as we have said before, to fund tax cuts over there. We pay more tax over here, but the Mauritians will be able to cut their taxes with the money that we are very generously sending to them.

As I said, on value for money we are being told to expect spending cuts at the Budget on 26 November. Before the Government cut a single extra service for the British people, Ministers should first consider cutting their surrender deal with the Mauritian Government. In my view, most of the British public would be aghast when presented with the fact that the Government have surrendered territory to a foreign state and simultaneously somehow found themselves paying for the privilege. This is a clear failure to deliver value for money to taxpayers.

My Amendment 70 would require the Government to make a statement explaining why they believe that each payment to Mauritius represents value for money. My Amendment 75 would require the publication of a schedule of expected payments to Mauritius along with their dates. The Government should not resist measures which increase transparency on the financial elements of the agreement.

I gave a wry smile when the noble Lord, Lord Weir, asked the Minister for the breakdown of the costs of this agreement between the MoD budget and the FCDO budget. I hope he has more success than I have in asking this question, because I have asked it five times and she has refused to tell me how much is being paid out of the different budgets. One was beginning to suspect that she does not even know how much money we are handing over on behalf of this deal.

I additionally ask the Minister what powers Ministers have to ensure that the money we hand over to Mauritius is spent as agreed. The noble Baroness, Lady Foster, particularly highlighted the trust fund supposedly set up for the benefit of Chagossians, but how they spend it is entirely within the control of Mauritius. There have been well-documented corruption cases in Mauritius; how do we know how that money will be spent? I think we should be told or Ministers should at least seek to find out.

Finally, Amendment 74 relates to a slightly separate question on the part of the UK-Mauritius agreement relating to the employment of Mauritians on the Diego Garcia military base. I tabled it to ask the noble Baroness some specific questions on the practical effect of the article of this agreement. Can she confirm whether this article means Mauritians will be prioritised for employment on the Diego Garcia military base over, for example, British citizens or Chagossians? Who ultimately would their employer be? This also speaks to value for money. Can the Minister confirm whether her department has made any assessment of the impact of the provisions relating to the employment of Mauritians and how much that will contribute to the cost of running the base?

I am not sure that diplomacy is quite the thing for the noble Lord to aspire to. We will move to discussing the amendments that deal with the financial issues and the payments to be made under the treaty. Inevitably in Committee, other issues will be raised as part of the discussions, including those around the trust fund and the way it is managed, as well as security. These are important questions but, if it is okay with noble Lords, it is probably better to deal with them when we reach the appropriate group, so that we can get into sufficient depth when we deal with those specific amendments.

A large number of the amendments in this group seek to deal with reviewing payments, including Amendment 22 tabled by the noble Lord, Lord Callanan. I completely reject this amendment. There has been much debate on this topic in both Houses. I reiterate that the full costings of the agreement were published alongside the treaty and laid in both Houses on 22 May. The average cost per year in today’s money is £101 million, and the present net value of payments under the treaty is £3.4 billion.

An explanation of the methodology for computing these costs was set out in the treaty’s Explanatory Memorandum, and these figures have been verified by the Government Actuary’s Department and draw on long-established methodology to account for long-term projects. This is the standard formula set out in the Green Book, which the Government have used on all long-term projects since 2003. Noble Lords can have their view on whether they think that is the right or wrong way of doing it, but consistency is essential in these matters.

On Amendments 5, 23 and 30, I state once again that the full costs of the treaty have already been published. Additionally, we cannot provide an assessment of the financial implications for the United States—that would be for the United States itself to publish and deliver. As the noble Lord, Lord Browne of Ladyton, informed us on Second Reading, investment from the United States stopped once the legal uncertainty emerged, and I am hoping that it will resume.

Additionally, noble Lords ought to be aware, and I think some are, that the United States is responsible for the operating costs of the base. I have heard it said a couple of times in this debate—including, I think, by the noble Lord, Lord Hannan; he will forgive me if he did not—that we are paying, and the United States gets the benefit. Actually, the United States contributes far more than we do, because it is responsible for the operating costs, which are considerable.

I assure noble Lords that the treaty contains robust security provisions, including a prohibition on foreign-country forces on the outer islands, whether civilian or military. In addition, the UK has, in effect, a veto on any construction or development across the islands. That is why this has been supported by the United States and all our Five Eyes partners. It is perfectly within the rights of any noble Lord to reach their own security assessment and judgment on what should be allowed, but the assessment of the White House and every one of our Five Eyes partners is that they support this treaty.

Amendment 24 is inconsistent with the treaty. An annual payment to Mauritius is a fundamental part of the agreement. This principle, and the amounts of those payments, were published in full on the day of signature.

On Amendment 52, Parliament has already agreed on the general principles of the Bill. It has passed Second Reading in both Houses and further stages in the other place, and Parliament has not voted against ratification through the CRaG process. This requirement for further approval from Parliament for the payments would ignore the thorough and correct process that the treaty and the Bill have already gone through and risk undermining the treaty, since non-payment by the UK is grounds for termination.

Amendment 53 is an interesting one, I admit. I must stipulate that payments to Mauritius are a key element of the agreement. This amendment would constrain the Government in a hypothetical situation and could therefore force them to act against the UK’s best interests in future. Although I genuinely appreciate the interest that the noble and gallant Lords, Lord Craig and Lord Houghton, have shown in the environment surrounding the islands, the coastland of Diego Garcia, as with all atoll islands, as the noble and gallant Lord, Lord Craig, knows, is naturally dynamic. Although we cannot predict future erosion, scientific studies have concluded that the overall land area of parts of the island not shaped by military construction decreased by less than 1% over the last 50 years. If we were in a situation where Diego Garcia is sinking under the waves, we would have a real problem on our hands, and the costs to adapt and deal with it would far exceed anything we are paying to Mauritius through this Bill. It would affect very many countries right across the world and probably all our island overseas territories.

On Amendment 59, the treaty is a key investment in our national security. The costs of the treaty will be split between the FCDO and the MoD—

I was stressing the point that the agreement is about the Chagos Archipelago, but we are interested in Diego Garcia. If Diego Garcia is not available, the treaty requires us to continue to pay Mauritius for the 100 years or whatever it is. We would then be paying for something we do not even have, let alone have the use of. It would seem sensible to have some arrangement in the treaty to cope with this. I am surprised there is not one. If not, how will it be handled?

We do not expect to be confronted with this situation in the case of Diego Garcia. I am sure there will be adaptations to mitigate this, as there already have been. In the event that sea levels rise to the extent that they would need to in order to make the base unusable, the entire planet would be facing very real threat. That would confront us in very many locations, including Montserrat, St Helena and Ascension. This would probably be the least of our problems.

Out of respect for the noble and gallant Lord and his genuine concern—it is not an unreasonable question— I will reflect on this and try to come back to him with a more thorough response, because I can see that he cares about this and wants to know that the Government have given this the proper consideration that he would expect. I undertake to do that. Luckily, this is the first day of Committee and we have the opportunity to allow ourselves further conversations on these issues.

My concern is that we would have to continue to pay under the present agreement, even though there was not a base available.

I understand fully the nature of the noble and gallant Lord’s concern. He has explained it well and repeatedly, and I have committed to come back to him with a further response. I do not think I can do any more than that tonight.

Before the noble Baroness leaves that point, I fully respect the noble and gallant Lord’s position on the base not being available due to natural disasters—or, as we called it when I was a solicitor, an act of God—but what happens if the base becomes simply unusable because of an act of aggression by a bad actor in 50 years’ time, which we have no sight of at this moment? The point is that if it becomes unusable for whatever reason, whether by act of God or an act of aggression, will we still continue to pay for a base that we cannot use?

I simply cannot answer that because it would depend so much on the circumstances and on who would be culpable. I do not know. I will think about that and come back to the noble Baroness. It is very difficult to respond to hypotheticals. I could create a few hypotheticals that answer those specific questions but I do not think that would necessarily get us anywhere. She is probably after something a little more concrete than that. I will give that some further thought and see whether I can come back to her with something more satisfactory. I guess, ultimately, that if there is some unavailability we have the option of breaching the terms of the agreement through non-payment, which would end the agreement. However, I will look into our legal position in that situation and make sure we have some clarity so that we can consider this further if we need to.

On the issue of the split and how the money will be found, the noble Lord opposite—in his usual charming way—suggests that we have not really thought about this. Some of the money will come from the FCDO and some from the MoD. It is all government money; it is all taxpayers’ money. I really do not understand the preoccupation with this. That split will be fair. We are very used to paying for things jointly. We do it all the time on various things. This is not an unusual situation.

Will the Minister tell us how much? There is a difference between the money that is spent from her aid budget in the FCDO and the money spent from the MoD. If it is such a simple, straightforward issue that she keeps brushing the question aside then why not just give us the figures? How much of it is coming from the MoD budget and how much of it is coming from the ODA budget, which is, of course, capped?

It is not capped, actually. Not all ODA money is spent by the FCDO. The MoD spends ODA as well. Not all money spent by the FCDO is ODA. You can spend ODA only on certain activities in certain places. My reading of the OECD rules is that I do not think the DAC would allow us to spend ODA for the purpose of paying for a military base. That does not mean we could not spend ODA in Mauritius if we wanted to—we have a very small programme there at the moment. I hope that helps. The noble Lord may wish to go away and read up on the DAC rules, which might assist him in answering this question.

I was not asking for an explanation of how the different split works between Foreign Office money and ODA money; I was simply asking her how much of the Bill is spent from the Foreign Office budget and how much of it is spent from the MoD budget. I do not see what is so difficult about answering a simple question.

But the noble Lord did ask me about ODA.

That was part of the question: how much is coming out of the ODA budget?

It is not coming out of the ODA budget—that is my point—but that does not mean it is not coming out of the FCDO budget, which is different. Does that help the noble Lord?

Why does the Minister not just tell us how much?

I do not know how much will be from the FCDO and how much will be from the MoD. It is not ODA, which is the bit I am responsible for. I do not fully understand—perhaps the noble Lord could tell me—why it makes a difference to him how much comes from the FCDO and how much comes from the MoD. I might be better able to assist him if he wishes to explain why this is important. It is not ODA, if that is his concern.

That is an interesting clarification that I have not heard before. Is she telling us, then, that none of the money funding this agreement comes out of the ODA budget?

You cannot pay for a military base out of your development budget.

My Lords—

I have not given way; I have had enough of this. The noble Lord should probably write to me and explain his question, because we are clearly not getting very far with this. If the noble Baroness on the Back Bench wants to have a go and puts it in a different way, I would be very happy to try to answer.

The Minister wants this in writing, but unless I am particularly stupid, I thought it was a very simple question.

The question was: how much is going to be from the ODA budget? I have answered that, and I do not know how to answer that any more clearly. As for how much comes from the FCDO and how much from the MoD, the Treasury will allocate us different amounts of money for different things. I do not quite understand why that makes a difference to the noble Lord—

I know the Minister was not attracted by the charms of the front bench, so I will try slightly differently. I suppose what we are trying to establish first of all is the percentage breakdown between the FCDO and the MoD. It matters because if this is not additional money, there will be a level of opportunity cost. If, for example, we are eating into the MoD budget, that money could be spent on other things. I think, from what I have gathered from what the Minister has said, that the bulk of the money would come from the MoD because of restrictions, but it would be useful to have percentage terms.

Okay, I will see whether we can get that. I do not know that that will be consistent over time, and I do not know whether the Treasury will want to be making that clear from now on. The MoD is deciding to buy itself some capability with this money. It is a significant investment, but it is not beyond the realms of what the MoD would spend on a capability such as this. That is my understanding. Exactly how much comes from each department will be published as we go along, because these things are published in the ordinary run of things.

The confusion in my mind comes from the interchangeable use of “ODA” and “FCDO”, and they are clearly different things. I look after the ODA budget, but the FCDO spends an awful lot more than just ODA. The MoD spends the ODA, too, as does DESNZ, the Department of Health, Defra and many other departments. Does this help noble Lords? Are we getting somewhere?

On Amendments 70, 74 and 75, all tabled by the noble Lord, Lord Callanan, I repeat that Parliament has already agreed the principles of the treaty and has not decided to vote against ratification. Any requirement for further approval from Parliament for the payments ignores the thorough and correct process that the treaty and Bill have already gone through and risks undermining the treaty, since non-payment by the UK is a ground for termination.

Regarding Amendment 74, I reassure noble Lords that there are no impacts on the cost of running the base from Article 10. This article pertains to the normal contractual arrangements, with any preference being to the maximum extent practicable and consistent with existing policies, requirements, Laws and regulations.

Finally, regarding Amendment 75, I remind noble Lords that an annual payment to Mauritius is a fundamental part of the agreement, and this principle, and the amounts of those payments, were published in full on the day of treaty signature. I hope that in the light of this, the noble Lord will withdraw his amendment.

I asked the Minister a specific question about whether His Majesty’s Government knew about India and Mauritius. Did they know or not?

Of course we knew. My understanding is that this pre-dated negotiations and refers to something on the island of Mauritius itself. if I am wrong about that, I will correct the record and inform the noble Baroness.

With the Committee’s permission, I beg leave to withdraw.

Amendment 5 withdrawn.