Letter to the Chairman of the Committee
from Rt Hon Peter Hain MP
Thank you for your letter of 24 April asking
for a further note about pensions in Gibraltar. As the Committee
are aware, a potentially large contingent liability is accruing
as a result of the Government of Gibraltar funded Household Cost
Allowance (HCA) scheme which we are concerned may be discriminatory
against Spanish pensioners under EC law. We estimate the contingent
liability to be in the region of £77 million, although it
is difficult to be precise.
The Government does not accept responsibility
for any liability arising in this matter and we have repeatedly
made this clear to the Government of Gibraltar. We have repeatedly
urged the Government of Gibraltar to reform or replace HCA to
ensure that it is consistent with EC law and to stop the contingent
liability from accruing further. We have offered technical assistance
to the Government of Gibraltar to facilitate this.
The European Commission has commenced investigations
into financial arrangements for those of pensionable age in Gibraltar.
The UK Government will continue to respond to their inquiries.
The Chief Minister of Gibraltar wrote to the
then Permanent Under Secretary of the Foreign and Commonwealth
Office on 24 July 1998 indemnifying the Government against any
liability arising from this date until such time as HCA was reformed.
The indemnity is a political rather than a binding legal commitment.
The Chief Secretary of Gibraltar wrote on 28 March 2002 giving
12 months notice of the withdrawal of that indemnity. In the absence
of reform or replacement of the HCA, the contingent liability
continues to accrue.
The Commission is also concerned about another
payment made to those of pensionable age in Gibraltar, the Elderly
Rt Hon Peter Hain MP
Minister for Europe
16 May 2002