Why the UK kept an Afghan immigration scheme secret

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0:33Today is Wednesday, July 16th, and this is your FT News Briefing. Washington has agreed to another trade deal, and the veil has been lifted on a secret UK immigration plan. Plus, investors can't get enough of catastrophe bonds. I think as the bill for climate change grows, more investors are finding a way to take bets on different parts of that market. I'm Sonia Hudson, and here's the news you need to start your day.

1:12Indonesia and the U.S. have struck a trade deal. That's according to President Donald Trump. He said Indonesia will pay 19 % tariffs on exports to the U.S. And the U.S. will pay zero levies to send goods there. The president also said that Jakarta will buy American energy exports and Boeing jets. Trump had threatened to impose a 32 percent levy on the country if they didn't strike a deal. This is the first agreement among more than 20 trading partners who received direct tariff threats from the U.S. last week.

1:54The UK set up a secret plan to relocate thousands of Afghans to Britain. They were at risk of being harmed by the Taliban after their personal data was accidentally leaked by a British soldier. The news came out yesterday after the High Court lifted a two-year ban on reporting the story. Here to break this down for us is the FT's Whitehall editor, Lucy Fisher. Hey, Lucy. Hi, Sonia. So help me lay out the facts here. What exactly is this relocation scheme? Well, let me take you back to the beginning. In February 2022, an unnamed British soldier accidentally leaked a vast database of sensitive personal details of Afghans who cooperated with Britain in Afghanistan.

2:42and the fear was that if this database fell into the hands of the Taliban, these Afghans on that spreadsheet would be at risk potentially of murder, torture, intimidation or harassment. In terms of figures, there were the details of about 25 ,000 Afghans and some of their family members and the UK government assessed that this put 100 ,000 at risk of Taliban reprisals. Now, the leak wasn't discovered immediately. It was 18 months later that the Ministry of Defence in Britain discovered it. And what it also went on to do was to set up a secret mass relocation scheme for Afghans affected by the data breach to come and be resettled in Britain.

3:31Yeah, tell me more about the secrecy around this program. How did that affect reporting on the leak and the relocation project itself? So when the Ministry of Defence in Britain learned of the data leak, they immediately sought regular reporting restrictions in order to stop the media publicising this so that they could take protective action to help those Afghans in Afghanistan who could face these reprisals. What happened was that the judge went further and imposed a rare super injunction, which means that you're not even allowed to refer to or publicise the fact there are any reporting restrictions at all.

4:14And the scale and the existence of this secret immigration route, which has cost several billion pounds, has only been made clear to British Parliament, to the British public this week. Well, is this scheme still going on now? Well, the secret scheme to relocate Afghans to the UK closed on Tuesday to new applicants. So far, 4 ,500 have already arrived or are in transit to Britain. The UK government has confirmed it will honour the approvals it has made to an extra 2 ,400 people. So on Tuesday in Parliament, lots of people were hearing about this very complicated story for the first time. But it remains to be seen, you know, whether the scale of migration from Afghanistan into the UK is going to provoke any kind of populist backlash.

5:10Or whether they'll feel that this is a special case, that they deserve sanctuary, given this data blunder has put them at risk. Lucy what could this mean for how the government is going to operate in the future do you think there are lessons learned here well I think certainly there will be big questions about the minutiae of the way these relocation schemes have worked whether they've been properly funded whether they have put you know additional pressure on the UK's health system education system, where the central government has properly funded that or left it for already very cash strapped local councils to try and pick up the slack with people arriving in their local areas under these various schemes.

5:58Lucy Fisher is the FT's Whitehall editor. Thanks, Lucy. Thanks, Sonia.

6:08it looks like tariffs are starting to hit inflation in the u.s june numbers came out yesterday inflation hit 2.7 percent last month that's up from 2.4 percent in may which is a bigger increase than economists expected inflation has stayed low since president donald trump announced tariffs in April. But economists have been predicting that the number would start to climb eventually.

6:42Insurers are issuing catastrophe bonds at a record rate. These companies are trying to offload some of the growing risk from climate change. And they're finding an eager market in investors who are looking for high returns. The sales come as the world is grappling with extreme weather, like devastating floods in Texas and heat waves in Europe. Here to talk more about how climate change is reshaping the bond market is the FT's Lee Harris. Hi, Lee. Thanks for having me on. Thanks for being here. So first off, how exactly do catastrophe bonds or cat bonds work? Yeah, it's kind of a cute name for a pretty high risk, although high reward investment.

7:26So So big insurers, particularly U.S. insurers, the likes of State Farm and Citizens, which is Florida's state-backed insurer, it's a way that they kind of spread or offload the risk of their biggest, most infrequent disasters, the likes of a Hurricane Katrina or a massive U.S. earthquake that would completely empty out their reserves. they can share those risks with capital markets investors. So from the investor side, hedge funds and pensions and family offices really like buying cap bonds because they offer really high returns. The only caveat is that if there's a big storm, they're on the hook for it.

8:08So they pay out in the wake of a large storm. And just how big of an increase in these catastrophe bonds are we talking about here so far this year? It's pretty chunky. So last year was also a record. There were about$17.7 billion worth of cat bonds sold in 2024. And now we're only halfway through 2025 and already insurers have issued$18.1 billion of cat bonds. Wow. So on track to really smash that record from last year. Yeah, it's a big jump. Lee, why are insurance companies issuing so many of them? I mean, like you mentioned, this is a huge increase in issuance from last year. Yeah, the costs of big catastrophes are climbing pretty much every year.

8:57So over$100 billion a year of insured losses used to be extraordinary, but is now the new normal in terms of the payouts that big insurers are facing on extreme weather events. Cat bonds have also grown because investors in them haven't faced a big payout in the last couple of years. So remember, they insure against those really remote mega storms like a Hurricane Katrina type event. So while we can see really big events, they're often not quite big enough to trigger a cat bond payout. That's one driver of more investors upping their appetite for cat bonds. So this is basically a high-risk, high-reward investment.

9:42I guess the big question I have is, what does this all tell us about how climate change is reshaping financial markets? I think as the bill for climate change grows, more investors are finding a way to take bets on different parts of that market. So climate change has already been a big growth opportunity for the insurance industry as, you know, homes and businesses have looked to shift more of the risks that they're facing onto insurers for an often pretty high price. And capital markets investors, you know, alternative investors see a way in. In this case, hedge funds and pensions and family offices have a really strong appetite for taking on the risk of a huge climate-driven event.

10:28The question is, when that event finally hits, whether they'll stay in the market or whether after facing a big payout, they could pull out and potentially create some real volatility driving up insurance prices. Lee Harris is the FT's insurance correspondent. Thanks, Lee. Thanks so much, Sonia. You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.

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