UK Social Security and Child Support Commissioners' Decisions

[2005] UKSSCSC CIS_1491_2004 (03 February 2005)

CIS/1491/2004

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. I dismiss the claimant's appeal against the decision of the Cardiff appeal tribunal dated 13 February 2004.

REASONS

2. This appeal is concerned with the entitlement of persons living within the European Economic Area to winter fuel payments. I held an oral hearing. The claimant appeared in person but was assisted by written submissions made by Mr Stewart Wright, legal officer of the Child Poverty Action Group, on the questions of European Union law that arise in the appeal. The Secretary of State was represented by Mr Thomas de la Mare of counsel, instructed by the Solicitor to the Department of Health and the Department for Work and Pensions. I have been greatly assisted by all the arguments addressed to me.

The history of winter fuel payments

3. Section 138(2) of the Social Security Contributions and Benefits Act 1992 permits the making of payments out of the social fund "of a prescribed amount or a prescribed number of amounts to prescribed descriptions of persons, in prescribed circumstances to meet expenses for heating which appear to the Secretary of State to have been or to be likely to be incurred in cold weather". Shortly after the forerunner of that section came into force, the Social Fund Cold Weather Payments (General) Regulations 1988 (S.I. 1988 No. 1724) were made. Those Regulations are still in force and provide for payments to be made to claimants in receipt of income support or income-based jobseeker's allowance if there are short periods of particularly cold weather in their areas. Such "cold weather payments" are to be distinguished from "winter fuel payments" with which the present case is concerned.
4. The Social Fund Winter Fuel Payment Regulations 1998 (S.I. 1998 No. 19) were also made under section 138(2). Regulation 2(2) made provision for a single lump sum to be paid to certain men and women aged 60 or over and in receipt of income support or income-based jobseeker's allowance in the "qualifying week". Regulation 2(5) and (6) made provision for a smaller lump sum to be paid to men aged 65 or over and women aged 60 or over in the "qualifying week", provided they were ordinarily resident in Great Britain and were entitled to one of a large number of benefits, including retirement pensions but also including benefits granted on the grounds of incapacity, disability or widowhood. The "qualifying week" was the week beginning 5 January 1998. The Regulations were amended to make similar provision in respect of a qualifying week in November 1998 and then in each subsequent September.
5. However, on 16 December 1999, the European Court of Justice held, in Regina v. Secretary of State for Social Security, ex parte Taylor (Case C-382/98) [1999] E.C.R. I-8955, that the winter fuel payments scheme under the 1998 Regulations was inconsistent with Directive 79/7/EEC on the progressive implementation of the principle of equal treatment for men and women in matters of social security, insofar as the qualifying ages for men and women were different under regulation 2(5) and (6). More specifically, the Court held that the payments were a form of old age benefit within the scope of the Directive and that the difference in the qualifying ages was not a necessary consequence of there being different pensionable ages for the purpose of retirement pensions.
6. The first result of Taylor was that the Social Fund Winter Fuel Payment Regulations 2000 (S.I. 2000 No. 729) were made to replace the 1998 Regulations. Subject to a few exceptions, regulation 2 provides that –

"… the Secretary of State shall pay to a person who –

(a) in respect of any day falling within the qualifying week is ordinarily resident in Great Britain; and

(b) has attained the age of 60 in or before the qualifying week,

a winter fuel payment …"

Thus, the age difference has been abolished and so has the requirement that the claimant be entitled to a specified benefit. Various amounts are fixed but, since 2003, what can be regarded as the standard amount is £200. The qualifying week is the week beginning on the third Monday in September of the year in question. Any claim must be made by the end of the following March but payment can be made without a claim and is in most cases where the Department for Work and Pensions is aware of the existence and whereabouts of a potential recipient. Winter fuel payments are, in effect, annual periodical payments.

7. The second result of Taylor was that it became apparent to the United Kingdom government that winter fuel payments fell within Regulation (EEC) 1408/71 on the application of social security schemes to employed persons and their families moving within the Community, because it is plainly difficult to argue that a benefit that is an old age benefit for the purposes of the Directive is not also an old age benefit for the purposes of the Regulation. A number of British pensioners living outside the United Kingdom but within the European Economic Area (EEA), of whom the present claimant was one, had written to the European Commission to complain that they were being refused winter fuel payments on the ground that they were not resident in Great Britain. On 2 July 2003, Mrs Diamantopoulou, on behalf of the Commission, responded in the following terms to a question in the European Parliament.

"Following lengthy discussion between the British authorities and the Commission, the United Kingdom has agreed to pay winter fuel payments to people living in other Member States as long as they were in receipt of such a payment before they left the United Kingdom.

"It is important to recall that the Community legislation on social security, Regulation (EEC) No 1408/71, only covers the 'co-ordination' of social security schemes for people who move around the Union. In no way does it replace the national social security schemes, and it is entirely a matter for the Member States to organise and finance their socials security schemes as they see fit. Regulation (EEC) No 1408/71 aims to protect the socials security rights of those who move, but in itself does not give rights to benefits under the national social security schemes. Entitlement to benefits is a matter for national law. In doing so the Member States must of course abide by the basic principles of Community law, such as non-discrimination on grounds of nationality, but there is no suggestion in this case that any such discrimination exists.

"Now that the United Kingdom accepts that winter fuel payments do come within the scope of Regulation (EEC) No 1408/71, for those entitled to it under British law, and who themselves come within the personal scope of the Regulation, the payment will be 'exportable' to another Member State. However, for those who were not entitled to it under national law, Regulation (EEC) No 1408/71 cannot be used to retroactively create an entitlement in respect of people who left the United Kingdom before the scheme was set up in 1998.

"The Commission's understanding of winter fuel payments is that it is a non-contributory benefit, so the number of years of National Insurance contributions is irrelevant. It is also not linked to tax, nor is it means-tested. While it may seem like an addition to the state old age pension, legally this is not the case, and entitlement to an old age pension is not a condition of entitlement, as is clear from the fact that men aged 60 or above can claim before they are entitled to a retirement pension. To be entitled a person must be aged over 60 and must have been resident in the United Kingdom on certain date (the 'qualifying week').

"United Kingdom nationals who satisfy the conditions under national law will be entitled to have a winter fuel payment paid to them in whichever Member State they reside. However, for the reasons set out above, not all pensioners will be so entitled, but this difference in treatment is not contrary to Community law."

8. In fact, agreement had been reached a year before Mrs Diamontopoulou's statement, the United Kingdom government announcing on 19 July 2002 that the winter fuel payments scheme would be extended in some circumstances to nationals of EEA states resident in such states other than the United Kingdom. Retrospective claims were invited in respect of years back to the introduction of the scheme in the winter of 1997/98.
9. The principal issue arising on this appeal is whether the Commission and the United Kingdom government are correct in their understanding of Community law.

The facts of this case

10. The claimant's claim for winter fuel payments in respect of the years 1997/98, 1998/99, 1999/2000, 2000/01 and 2001/02 was received on 15 January 2003. I presume that there was also a claim in respect of 2002/03. The claimant was born in 1928 and so clearly satisfied the age criterion for entitlement. However, while he said that he had not permanently left the United Kingdom, he also stated that he was permanently residing in an EEA state other than the United Kingdom. In response to a further enquiry, he produced a document showing that, on 2 December 1999, he had been registered as resident in Alicante in Spain with effect from 16 July 1999. On the other hand, the payment records in respect of his retirement pension showed that he had moved to Spain on 8 June 1997, that a form E121 was issued on 16 October 1997 and that he was registered with the appropriate social security authorities in Alicante on 29 December 1997. In those circumstances, his claim was disallowed by the Secretary of State on the ground that he had ceased before 5 January 1998 to be ordinarily resident in Great Britain.
11. The claimant appealed, advancing a number of arguments. First, he relied on Article 10 of Regulation (EEC) 1408/71 which, he submitted, entitled him to winter fuel payments as long as he was resident in any EEA country because, contrary to the view of the European Commission, they were de facto part of his retirement pension. Secondly, he complained of discrimination contrary to the European Convention on Human Rights because many people living in Spain were erroneously regarded by the Secretary of State as still resident in the United Kingdom and he also claimed discrimination by comparison with a friend of his who had moved to the Republic of Ireland before 5 January 1998 but who was nonetheless receiving winter fuel payments. He further submitted that the refusal of winter fuel payments breached his rights under Article 8 of the Convention. In one of the letters enclosed with his appeal form, he also argued that he had been living on British sovereign territory until he sold his British registered boat, which had generally been wintered in Gibraltar and in another submission he made the point that his income was taxed in the United Kingdom.
12. The claimant did not attend the hearing before the appeal tribunal but he was represented by his niece who argued that residence in one EEA state counted as residence in any other, that the claimant had in any event remained ordinarily resident in the United Kingdom because his roots were there and he had not left permanently and that neither having an address in Spain nor having completed a form E121 made him resident there. She also said that he had left the United Kingdom on his boat in 1997 and had not bought his home in Spain until after the sale of a property in Sussex in about 1999.
13. The tribunal dismissed the claimant's appeal. The sole member of the tribunal found the claimant to have had a settled purpose of making his home in Spain in 1997 and she rejected the evidence that he bought his house in Spain only in 1999, because there was evidence that he had been writing from it in February 1998. She also pointed out that liability for income tax does not depend on residence and that residence on British sovereign territory is not necessarily residence in Great Britain. Accordingly, she found that the claimant had not been ordinarily resident in Great Britain since before 5 January 1998. She accepted the Secretary of State's submission that Article 10 of Regulation (EEC) 1408/71 does not apply to permit a benefit to be exported if the benefit has not first been acquired. She found there to be no evidence of discrimination against the claimant and she rejected the challenge under the Convention on the ground that she had no power to issue a certificate of incompatibility.
14. The claimant now appeals against the tribunal's decision with my leave.

Domestic law

15. The claimant contended that the tribunal erred on a number of procedural grounds but none of those is of any significance if the tribunal nonetheless reached the correct conclusion. There is, at the end of the day, no significant doubt as to the facts of this case.
16. The claimant conceded at the hearing before me that his niece had been wrong as to the date of sale of his home in Sussex. What he told me was that the house in Alicante was not fit for human habitation when he bought it and that he had continued to live on his boat, which he accepted he had been doing long before 1998. His argument as to residence in Great Britain under domestic law was therefore based principally upon the idea that residence on a British registered boat or in Gibraltar is to be treated as residence in Great Britain.
17. That is simply not the law. There is no general provision to the effect that residence on a British registered boat is to be treated as residence in Great Britain when the boat is not in British waters and, in particular, there is nothing in the Merchant Shipping Act 1995 to that effect. The Social Security (Mariners Benefits) Regulations 1975 (S.I. 1975 No. 529) have no application to the present case. Nor is there any provision to the effect that residence in a British colony is to be treated as residence in Great Britain. Even residence in Northern Ireland is treated as residence in Great Britain for social security purposes only because there is specific provision to that effect in paragraph 2(1) of Schedule 1 to the Social Security (Northern Ireland Reciprocal Arrangements) Regulations 1976 (S.I. 1976 No. 1003).
18. In respect of Gibraltar there is limited provision to a similar effect in paragraph 3 of the Schedule to the Family Allowances, National Insurance and Industrial Injuries (Gibraltar) Order 1974 (S.I. 1974 No. 555) but that applies only where the person is "not subject to paragraph 2". Paragraph 2(a) provides –

"Any person shall have the same rights and liabilities in relation to social security other than family allowances, as he would have had if the United Kingdom and Gibraltar had been separate Member States of the European Economic Community."

The words "not subject to paragraph 2" in paragraph 3 must therefore be taken to mean "not within the scope of legislation of the European Economic Community relating to social security", so that paragraph 3 applies only to persons outside the scope of Regulation (EEC) 1408/71, just as, say, the Family Allowances, National Insurance and Industrial Injuries (Spain) Order 1975 (S.I. 1975 No. 415) does by virtue of Article 6 of Regulation (EEC) 1408/71 which provides that the Regulation replaces any social security convention between Member States. The claimant is within the scope of the Regulation (EEC) 1408/71 because he is a citizen of the United Kingdom and is a retired worker. Therefore his residence in Gibraltar does not count as residence in Great Britain as a matter of domestic law except when provisions of Regulation (EEC) 1408/71 would have that effect. I shall consider those provisions below.

19. The claimant's other arguments confuse residence with domicile. Domicile is concerned with where a person's long-term roots are and I am quite content to accept that the claimant remains domiciled in England and Wales. However, residence is concerned with the place where he has his home for the time being. A person may have more than one residence but it is unusual to be ordinarily resident in more than one place at a time. It is unnecessary to explore the circumstances in which that may occur. The truth is that the claimant had ceased to have any residence in Great Britain before 5 January 1998 and so he plainly was not ordinarily resident in Great Britain as a matter of domestic law.
20. The claimant has not repeated on this appeal his arguments based on the European Convention on Human Rights, which is incorporated into domestic law by the Human Rights Act 1998. The tribunal clearly erred in declining to deal with the arguments on the ground that it had no power to issue a certificate of incompatibility because such a certificate is required only when primary legislation is found to be incompatible with the convention. Here, as the tribunal rightly said, only secondary legislation was in issue. However, nothing turns on that error because there is no evidence that the claimant's rights under Article 8 of the Convention had been infringed and, if, contrary to the Secretary of State's submissions, any Article is engaged at all, there is no unlawful discrimination under Article 14. I do not see how a person to whom benefit has been paid in error can be regarded as a proper comparator as was submitted by the claimant to the tribunal. To the extent that there is a difference of treatment between those who are ordinarily resident in Great Britain and those who are not, that difference is clearly justifiable, because a state paying a non-contributory benefit must be entitled to require a claimant to demonstrate a practical link with that state. Ordinary residence can be regarded as an appropriate test for a benefit that is not a major benefit of last resort.

Community law

The scheme of the legislation

21. As Mrs Diamantopoulou said, Regulation (EEC) 1408/71 is concerned with the co-ordination of social security schemes in the context of individual Member States being entitled to develop their own social security systems. Although it exists principally to promote the free movement of workers, it does not apply only to migrant workers. It is common ground that the claimant falls within the personal scope of the Regulation and that winter fuel payments fall within its material scope.
22. Article 10 (1), which is at the heart of this case, provides –

"Save as otherwise provided in this Regulation invalidity, old-age or survivors' cash benefits, pension for accidents at work or occupational diseases and death grants acquired under the legislation of one or more Member States shall not be subject to any reduction, modification, suspension, withdrawal or confiscation by reason of the fact that the recipient resides in the territory of a Member State other than that in which the institution responsible for payment is situated.

"The first subparagraph shall also apply to lump-sum benefits granted in cases of remarriage of a surviving spouse who was entitled to survivors' pension."

23. Article 10a(1) provides –

"Notwithstanding the provisions of Article 10 and Title III, persons to whom this Regulation applies shall be granted the special non-contributory cash benefits referred to in Article 4(2a) exclusively in the territory of the Member State in which they reside, in accordance with the legislation of that State, provided that such benefits are listed in Annex IIa. Such benefits shall be granted by and at the expense of the institution of the place of residence."

24. Article 12(1) provides –

"This Regulation can neither confer nor maintain the right to several benefits of the same kind for one and the same period of compulsory insurance. However, this provision shall not apply to benefits in respect of invalidity, old age, death (pensions) or occupational disease which are awarded by the institutions of two or more Member States in accordance with the provisions of Articles 41, 43(2) and (3), 46, 50 and 51 or Article 60(1)(b)."

25. Article 13(1) provides –

"Subject to Articles 14c and 14f, persons to whom this Regulation applies shall be subject to the legislation of a single Member State only. That legislation shall be determined in accordance with the provisions of this Title."

26. Article 13(2)(a) provides that, subject to Articles 14 to 17 –

"a person employed in the territory of one Member State shall be subject to the legislation of that State even if he resides in the territory of another Member State or if the registered office or place of business of the undertaking or individual employing him is situated in the territory of another Member State".

27. Article 13(2)(b) to (e) makes provision in respect of the self-employed, people employed on ships, civil servants and people called up or recalled for service in the armed forces. Article 13(2)(f), which was not inserted until 1991, then provides that, subject to Articles 14 to 17 –

"a person to whom the legislation of a Member State ceases to be applicable, without the legislation of another Member State becoming applicable to him in accordance with one of the rules laid down in the aforegoing subparagraphs or in accordance with one of the exceptions or special provisions laid down in Articles 14 to 17 shall be subject to the legislation of the Member State in whose territory he resides in accordance with the provisions of that legislation alone."

28. Article 45(1) and (5) provides –

"1. Where the legislation of a Member State makes the acquisition, retention or recovery of the right to benefits, under a scheme which is not a special scheme within the meaning of paragraph 2 or 3, subject to the completion of periods of insurance or of residence, the competent institution of that member State shall take account, where necessary, of the periods of insurance or of residence completed under the legislation of any other Member State, be it under a general scheme or under a special scheme and either as an employed person or a self-employed person. For that purpose, it shall take account of those periods as if they had completed under its own legislation.

"…

"5. Where the legislation of a Member State makes the acquisition, retention or recovery of the right to benefits conditional upon the person concerned being insured at the time of the materialisation of the risk, this condition shall be regarded as having been satisfied in the case of insurance under the legislation of another Member State, in accordance with the procedures provided in Annex VI for each Member State concerned."

29. There is no general provision in Regulation (EEC) 1408/71 having the effect that residence in one Member State always counts as residence in any other Member State. As was pointed out by Evans LJ in Harris v. Secretary of State for Social Security (reported as R(DLA) 2/99), if there were such a provision a Member State would be liable to pay benefit to EU nationals wherever they may live and work, or have worked. A claimant would be able to acquire benefits from several Member States. Article 12 makes it plain that that is not intended.
30. Instead, Article 13 has the effect that a person is made subject to the legislation of a single Member State. In the case of old age benefits, that Member State is required to take account of periods of insurance and residence in other Member States by virtue of Article 45. Similar provision is made in respect of other benefits, the particular provisions being drafted in the light of the types of social security schemes there are in the various Member States. Article 10 then prevents that Member State from stopping payment if the claimant moves to another Member State. Thus, at first sight, Article 45 is concerned with the acquisition of entitlement and Article 10 is concerned with its preservation. Whether that is the right approach to Article 10 is the central issue in this case.
31. I have outlined the general scheme. Matters become more complicated where a Member State's social security system has more than one benefit of a particular kind or where a new benefit is introduced with unconventional conditions of entitlement not contemplated by the draftsmen of Regulation (EEC) 1408/71. (There is also a complication in that Article 46 has the effect that, where a claimant has been subject to the legislation of more than one Member State, responsibility for payment of old age benefits may be split between those Member States, but that does not affect the broad analysis required for the purpose of this case.)
32. One solution to the problem of a Member State having more than one benefit of a particular kind, say old age benefits, appears in Regulation 10a with the introduction of the concept of a special non-contributory cash benefit, payable only in accordance with the legislation of the Member State and only within the territory of that Member State. However, winter fuel payments are not such a benefit. The payments not been listed in Annex IIa. That may originally have been because the United Kingdom government did not consider that they fell within the scope of Regulation (EEC) 1408/71 at all. The effect is that the general scheme must apply.

The construction of Article 10

33. Like retirement pension, winter fuel payments are an old age benefit. They can be, but are not necessarily, paid at the same time as a retirement pension. However, where a person is subject to the legislation of the United Kingdom he cannot derive entitlement to winter fuel payments through the operation of Article 45 if he is ordinarily resident in a Member State other than the United Kingdom. That is because paragraph (1) of Article 45 is concerned only with the aggregation of periods of insurance or residence. Paragraph (5), is concerned only with insurance at the time a risk materialises and not with residence on that date or any other particular date. There is no provision having the effect that ordinary residence in another Member State on a particular date is to be treated as ordinary residence in Great Britain on that date.
34. Does that mean that Article 10 has to be read as prohibiting a Member State from refusing to allow a claimant to acquire entitlement to winter fuel payments by reason of the fact that he resides in the territory of a Member State other than that in which the institution responsible for payment is situated ? That was the way the Article was apparently read by the European Court of Justice in Caisse régionale d'assurance maladie Rhône-Alpes v. Giletti and others (joined cases C379-381/85 and C93/86) [1987] E.C.R. 955. Mrs Giletti was an Italian National living in Italy but entitled to a widow's pension under a French scheme on the basis of contributions paid by her husband when working in France. She claimed a supplementary allowance from a French Fonds national de solidarité. Her claim was disallowed on the ground that she was not resident in France but the European Court of Justice held that the supplementary allowance was within the scope of Regulation (EEC) 1408/71 and that Article 10 "must be interpreted as meaning that the person may not be precluded from acquiring or retaining entitlement to benefits, pensions and allowances referred to in that provision on the ground that he does not reside within the territory of the Member State which the institution responsible for payment is situated".
35. However, Mr de la Mare submitted that Giletti has been substantially overtaken by subsequent decisions. In this country, the Court of Appeal has held, in Harris, that the implication of Daalmeijer v. Bestuur van de Sociale Verzekeringsbank [1991] ECR I-555 is that Article 10 does not have any bearing on the acquisition of a right to benefit – as opposed to its retention – save where the benefit in issue adds to, or supplements, a benefit already in payment (or, perhaps, where the benefit in issue is a modern version of some previous benefit paid to the claimant or there is some other clear connection). Where the benefit in issue is not linked to a benefit already in payment, Article 10 therefore cannot have the effect of disapplying a residence condition that is legitimately a condition of entitlement to the benefit in issue. The Court of Appeal's approach is consistent with the later decision of the European Court of Justice in Morvin v. Landesversicherungsanstalt Westfalen (Case C-73/99) [2000] E.C.R. I-5625 in which it is noteworthy that, although Mr Advocate General Jacobs explained the effect of Article 10 using in paragraph 14 of his opinion the precise terms the Court used in Giletti, the Court itself, in paragraphs 44 and 45 of the judgment, carefully emphasised that the benefit took "the form of an increase in the value of the pension" and was a "supplement".
36. Mr de la Mare further submitted that this new approach makes sense because a person who is entitled to a retirement pension under the legislation of Great Britain and then leaves the United Kingdom to take up residence in another Member State becomes entitled to claim benefits from that Member State. In those circumstances, it would, he argued, be inappropriate for the claimant to be able to claim new benefits from the United Kingdom, save where the benefit is truly a supplement to the British retirement pension.
37. At one time, the idea that a person could receive old age benefits from two different Member States would have been regarded as inconsistent with Article 13(1) of Regulation (EEC) 1408/71. In Ten Holder v. Nieuwe Algemene Bedrijsvereniging (Case 302/84) [1986] E.C.R. 1821, it was held that the effect of Article 13(1) in the case of a person to whom Article 13(2)(a) had formerly applied but who had ceased work was that that person continued to be subject to the legislation of the State where he was last employed, however long had elapsed. It is noteworthy that Giletti was decided shortly after Ten Holder. In subsequent cases, including Daalmeijer, it was held that the rule expressed in Ten Holder did not apply to a person who had permanently ceased all professional activity. Article 13(2)(f) was then introduced in 1991 expressly to reverse Ten Holder, even in cases of temporary cessation of work (see Kuusijärvi v. Rijsförsäkringsverket (Case C-275/96) [1998] E.C.R. I-3419).
38. This change in the way Article 13 is applied to those who have ceased employment necessarily, in my judgment, changes the way Article 10 must be construed. That explains why the language used in Giletti is no longer appropriate and the new approach in Harris and Morvin has been adopted. On the Ten Holder approach to Article 13, under which a person could broadly acquire entitlement to benefit under the legislation of only one Member State (albeit that residence, or contributions paid, in another Member State might be taken into account), the expansive approach to Article 10 suggested by the language of Giletti was required if Regulation (EEC) 1408/71 was sensibly to co-ordinate the different social security systems of Member States. It could not have been right to prevent a person acquiring entitlement to any benefit available under the legislation of the only Member State from whom he could claim a benefit. However, in the light of Article 13(2)(f), under which a person who has ceased employment becomes entitled to claim benefits from a Member State to which he has moved, it is logical that Article 10 should be construed so as not to permit the claimant also to qualify for new benefits in the Member State where he formerly lived. What Article 10 does permit is the retention of entitlement to benefits he has already acquired, together with any new supplements to them. Moreover, there is nothing in Article 12 that permits a Member State to withhold an old age benefit on the ground that an old age benefit is being paid by another Member State, unless the benefits are derived from the same period of compulsory insurance. In Giletti itself, the fact that the supplementary allowance acted as a supplement to a widow's pension was an important factor in the Court's conclusion that the benefit fell within the scope of Regulation (EEC) 1408/71, but it formed no part of the reasoning of the Court on the Article 10 issue. Now, the question whether the benefit in issue is a supplement to a benefit already in payment must be regarded as also being important when the application of Article 10 is being considered.
39. I therefore accept Mr de la Mare's submissions. If Spain did have a scheme for winter fuel payments and if winter fuel payments are not a supplement to a retirement pension, Spain would not be entitled to refuse such payments claimed by the claimant on the basis of his residence in that country merely because they were an old age benefit and the claimant was already in receipt of another old age benefit, in the form of a retirement pension, from the United Kingdom. Consistently, the British legislation does not deny winter fuel payments to a person who is entitled to an old age benefit from Spain or, indeed, any other country in the world.
40. The claimant protests that there are no relevant benefits in Spain to which he might be entitled. However, that does not affect the principle lying behind Mr de la Mare's submissions. European Union law merely co-ordinates the different social security systems of the Member States; it does not require all Member States to provide the same benefits. If a claimant who has ceased work moves to another Member State, he must take that State's benefit system as he finds it, whether it is more advantageous or less advantageous than the system of the State from which he has come.

Are winter fuel payments supplements to retirement pensions ?

41. I turn then to the vital question whether winter fuel payments are a supplement to a retirement pension of the type envisaged in Harris. It is, of course, obvious that as a matter of form, in domestic law, winter fuel payments are not a supplement to a retirement pension. However, Mr de la Mare rightly conceded that it is necessary to look at the substance of the matter, rather than the form of the legislation, because a Member State's responsibilities under European Union law cannot turn on the form of words it has chosen to use in its own legislation.
42. Winter fuel payments are payable to people who are not entitled to retirement pensions but, where a claimant was not entitled to a pension, they could still be regarded as a supplement to a pension the amount of which was nil. Metaphysical distinctions such as that between entitlement and payability, which is important in some areas of British social security law, have no relevance in this context. Even if that were not the correct approach, winter fuel payments could still be treated as a supplement to a retirement pension in a case like the present, where the claimant is actually in receipt of a retirement pension, particularly under the 1998 Regulations where entitlement to winter fuel payments could be derived from entitlement to a retirement pension. Therefore, the fact that winter fuel payments may be paid to claimants who are not entitled to retirement pensions is not, in itself, determinative.
43. The claimant argues that winter fuel payments have nothing to do with fuel at all and are, at least under the 2000 Regulations, related solely to age. The acceptance of that argument would be fatal to his case, because the whole scheme of winter fuel payments would be ultra vires if the payments were not intended to meet heating expenses incurred, or expected to be incurred, due to cold weather. The Secretary of State, of course, does not suggest that the claimant should be denied payment on the ground that the scheme is ultra vires and I need not consider that issue, although it has to be said that, at first sight, the validity of the scheme appears to hang substantially on the title of the Regulations.
44. It is sufficient for the claimant to argue, as he does, that winter fuel payments are a way of increasing the value of a pension and that it should make no difference that part of the pension is paid in a lump sum during the winter, in order to help pensioners with their fuel bills, rather than being spread throughout the year. That is a very powerful argument. He can also argue that, where a State has a number of different old age benefits, it is inevitably intended that they should supplement one another and it is anomalous that that State's benefits should be treated differently from a single benefit paid by another State at a rate equivalent to the total of the first State's benefits.
45. The difficulty facing the claimant is that, in referring to supplementary benefits in Harris, the Court of Appeal had in mind the case of Bestuur der Sociale Verzekeringsbank v. Smieja [1973] E.C.R. 1213, where the European Court of Justice referred to "benefits which, while created within the confines of a particular scheme … are given effect by increasing the value of the pension which would otherwise accrue to the recipient". In Smieja itself, the Dutch pension scheme to which the German claimant had contributed had been replaced by a new scheme under which benefits were paid at a higher rate. Transitional provisions affecting contributors under the old scheme were dependent on the satisfaction of a condition of residence in the Netherlands. It was held that Article 10 had the effect that the claimant could not be denied the improvements merely because she lived in Germany. There was an obvious connection between the new scheme and the old scheme. However, in Harris, the Court of Appeal held that a British claimant, living in Spain but in receipt of British incapacity benefit derived from previous entitlement to invalidity benefit, could not acquire entitlement to disability living allowance by virtue of Article 10. Disability living allowance was not a modern form of some earlier benefit to which the claimant had been entitled and was not regarded as a supplement to incapacity benefit.
46. Mr de la Mare very properly drew my attention to the facts of Morvin. That case concerned a person Dutch citizen, resident in the Netherlands and entitled to old age pensions from both German and Dutch institutions. The German legislation provided that pensioners were entitled to a subsidy towards German sickness insurance contributions but were not entitled to a subsidy if they lived in another Member State and were compulsorily insured there in that State's sickness insurance scheme. The European Court of Justice said that the subsidy "in so far as it takes the form of an increase in the value of the pension" was an old age cash benefit exportable by virtue of Article 10, so that the claimant was entitled to it notwithstanding that he was affiliated to the Dutch sickness insurance scheme. It seems to me that what Morvin shows is that, where contributory schemes are concerned, it will be relatively easy to show that the different elements to which a claimant might be entitled at any one time are intended to be part of a package.
47. Winter fuel payments, however, are not contributory and, in my judgment, under the 2000 Regulations, they have no more connection with retirement pensions than disability living allowance had with incapacity benefit in Harris. The fact that winter fuel payments are another form of old age benefit and are in fact claimed by a person entitled to retirement pension in this particular case – and, perhaps, in the majority of cases – is not sufficient to make them a supplement to a retirement pension so as to enable the claimant to acquire entitlement when already ordinarily resident in another Member State. If this produces anomalies between people living in different Member States then that is the consequence of Regulation (EEC) 1408/71 being concerned only with co-ordination and not with harmonisation.
48. Mr Wright, in his written submissions, makes the point that the 2000 Regulations replace the 1998 Regulations and that under the earlier legislation there was a direct link between retirement pensions and winter fuel payments. In the absence of authority, it could certainly be argued that, in the case of a person in receipt of winter fuel payments under the 1998 Regulations by virtue of his entitlement to a retirement pension, the winter fuel payments were a supplement to that pension. However, if that were the correct approach, it seems to me that Taylor would have been decided differently.
49. In Taylor, the United Kingdom government argued that, if winter fuel payments were to be regarded as old age benefits, contrary to its principal submission, it was necessary to have the same qualifying age as for retirement pensions for the sake of coherence. Mr Advocate General Mischo was not impressed by that argument and said:

"In the absence of a structural link between the state retirement pension and the payment provided for in the regulations, the argument invoking coherence amounts, in my opinion, to claiming that, at a theoretical, or indeed aesthetic, level, the choice of two different pensionable ages as a condition for granting the payment was the most satisfactory, even if there was no objective necessity to maintain that distinction rather than a single age of 60 which is applicable in the context of reg 2(2), or another."

50. The Advocate General's view that the United Kingdom government's argument was pitched at a theoretical or aesthetic level was, in my respectful opinion, well merited insofar as the argument related to cases where the claimant's entitlement to winter fuel payments was based on entitlement to a benefit other than a retirement pension. However, it could have been argued that the Court should regard winter fuel payments as supplements to the various benefits mentioned in regulation 2(6) of the 1998 Regulations. The government could have conceded that the Court should strike down the reference to unequal ages but argued that it should uphold the condition that the claimant be entitled to one of the prescribed benefits, including retirement pensions. Acceptance of that argument would have defeated Mr Taylor's claim, because he was not entitled to any of the prescribed benefits and, on that approach, the disadvantage he suffered by comparison with a woman could properly have been said merely to have been the necessary consequence of the unequal pensionable ages legitimately used for retirement benefit purposes and so within the scope of the derogation permitted by Article 7(1)(a) of the Directive.
51. In the event, no argument to that effect was put by the United Kingdom government, presumably because it was endeavouring to save the whole scheme, and the Court did not draw any distinction between claimants relying on entitlement to retirement pensions and those relying on entitlement to other benefits. The Court simply held:

"34. … if the benefit is designed to provide protection against the risk of old age and must, therefore, be paid only to those above a certain age, it does not follow that that age must necessarily coincide with the statutory age of retirement and, as a result, be different for men and women.

35. In the light of the foregoing, it must be concluded that discriminatory treatment such as that at issue in the main proceedings is not necessarily linked to the difference in the statutory age of retirement for men and women and is therefore not covered by the derogation laid down by art 7(1)(a) of the directive."

The necessary implication is that the Court did not regard winter fuel payments as mere supplements to other benefits but as a free-standing old age benefit.

52. I can see no reason for taking a different approach in the context of Regulation (EEC) 1408/71. On the contrary, it appears desirable that there should be consistency in the approaches taken to the Directive and to the Regulation. Accordingly, I am satisfied that, even under the 1998 Regulations, winter fuel payments are not a supplement to a retirement pension. Even more clearly must that be the case under the 2000 Regulations. Therefore, entitlement to winter fuel payments cannot be acquired by virtue of Article 10 where a claimant entitled to retirement pension has ceased to be ordinarily resident in the United Kingdom. Article 10 permits entitlement to winter fuel payments to be retained when the claimant moves to another Member State after he has acquired it, but that is not the situation in this case.

Conclusion

53. It follows that the tribunal was correct to find that the claimant was not entitled to winter fuel payments. His appeal must be dismissed.

(signed on the original) MR MARK ROWLAND

Commissioner

3 February 2005