Sir Keir Starmer has been accused of failing to guarantee the recently announced uplift in defence spending will not be spent on the contentious Chagos Islands deal.

After initially refusing to set out a timeline to increase defence spending to 2.5% of GDP, the prime minister confirmed on Tuesday the threshold would be met by 2027, with an ambition to reach 3% in the next parliament.

The move has been funded by a cut in the foreign aid budget from 0.5% of GDP to 0.3%, which the government says will release £13.4bn annually for defence – although experts say the figure is closer to half that, at £6bn.

Despite the move being welcomed by the main opposition parties, there have been questions as to whether the uptick in spending could be used to fund the Chagos deal, which would transfer the Indian Ocean archipelago to Mauritius after a decades-long dispute.

Politics latest: Badenoch takes credit for defence plan

The agreement includes the tropical atoll of Diego Garcia, home to a UK-US military base that plays a crucial role in the region’s stability and international security.

Under the proposed agreement, the UK would lease back Diego Garcia for 99 years at a reported annual cost of around £90m.

Although the Biden administration welcomed the deal as a “win for diplomacy”, Donald Trump’s White House has expressed reservations about the deal owing to its concerns over China’s influence in Mauritius.

During Prime Minister’s Questions, Tory leader Kemi Badenoch asked whether the increase in defence spending would be used to fund the Chagos deal.

“This morning the defence secretary could not say if the Chagos deal would come out of the defence budget,” she said.

“Can he confirm to the House that none of the defence uplift includes payments for his Chagos deal?”

The prime minister replied: “The additional spend I announced yesterday is for our capability on defence and security in Europe, as I made absolutely clear yesterday.

“The Chagos deal is extremely important for our security, for US security. The US are rightly looking at it. When it’s finalised I’ll put it before the House with the costings.”

He said “the figures being bandied around” were “absolutely wide of the mark”, adding: “The deal is well over a century but the funding I announced yesterday is for our capability to put ourselves in a position to rise to a generational challenge, that is what that money is all about and I thought she supported it.”

Later, Downing Street did not rule out that money from increased defence spending could be used as part of the Chagos deal.

Asked about Sir Keir’s response to questions about whether any of the new money will be spent on the deal, the prime minister’s official spokesman said: “The uplift announced yesterday will be going on our military capabilities, technology, adopting cutting-edge capabilities that are vital to retain a decisive edge as threats rapidly evolve”.

Read more:
Landmark moment Trump’s return stuns UK into action
Love Actually-style moment unlikely with PM and Trump

He later added: “We’ll obviously present the details of the Chagos deal as and when it’s finalised.”

Experts have questioned the £13.4bn figure used by the government, arguing that a 0.2% increase amounted to an extra £6bn in cash terms.

Ben Zaranko, associate director at the Institute for Fiscal Studies, said the prime minister “followed in the steps of the last government by announcing a misleadingly large figure for the ‘extra’ defence spending this announcement entails”.

“An extra 0.2% of GDP is around £6bn, and this is the size of the cut to the aid budget. Yet he trumpeted a £13bn increase in defence spending.

“It’s hard to be certain without more detail from the Treasury, but this figure only seems to make sense if one thinks the defence budget would otherwise have been frozen in cash terms.”