Sir Keir Starmer has been accused of a cover-up over his increase in defence spending. He refused to say whether it includes funding the cost of handing over the Chagos Islands to Mauritius.

The UK is in talks to hand control of the archipelago back to Mauritius as part of a deal rumoured to be worth £9bn. The government has refused to set out how much a 99-year agreement to rent back the base will cost.

The prime minister told MPs on Wednesday that the uplift is aimed at boosting "our capability on defence and security in Europe". However, he stopped short of ruling out using the cash to lease back the joint UK-US Diego Garcia airbase located on Chagos.

Tory leader Kemi Badenoch said Sir Keir's failure to disclose where the money for Chagos was coming from meant he had "all but confessed" it would come from the defence budget.

"Labour must not give a penny of defence cash to fund this shady deal. National interest first. No ifs or buts," Ms Badenoch wrote on X (Twitter).

It came after Sir Keir outlined plans to hike defence spending from 2.3 to 2.5 per cent of GDP by 2027, at an annual cost of £6bn, funded by slashing the UK's foreign aid budget.

"I think this all points to what amounts to really a cover-up of where this money for the Chagos surrender is coming from."

Currently, the UK-US airbase is on British sovereign territory so there is no need to pay for a lease. However, if the UK hands the islands back, the government will have to pay for a 99-year lease of the site. The rumoured payments for the base would amount to £90m each year - between 1 and 2 per cent of the £6bn defence spending uplift.

Shadow defence minister Mark Francois asked how Labour MPs would feel realising the party had cut overseas aid to give billions of pounds to Mauritius "all to rent back a base we already own". "It's madness," he added.

A government source hit back, adding that there were "orders of magnitude" between the annual uplift in defence spending and any future payments to Mauritius for the Chagos deal. "It's nonsense," the source added.