The statement by Mr Peter Hain, Minister for Europe in the House of Commons that Gibraltar’s pension arrangements are "a scam" is disgraceful and outrageous. It represents conduct unbecoming any Minister of the Crown, let alone one who is duty bound to represent and protect Gibraltar’s interests. Mr Hain should withdraw his remarks and apologise to Gibraltar for having made them.

The principal complaint by Spanish pensioners is that their pension rates have not been increased since 1987. The British Government pays Spanish Pensions. It is the British Government that has insisted on keeping them frozen at 1987 rates. The Spanish pensioners complaint is therefore against the UK and not against Gibraltar. Objective observers are therefore free to make a judgement as to who, if anybody, is perpetrating a scam.

In an ironic twist of fate, the Government notes that a legal case has been brought against the UK Government by UK old aged pensioners living abroad claiming that the British Government is discriminating against them because their pensions also are not increased by the British Government in line with inflation. That is the very complaint the Spanish pensioners make.

Mr Hain’s statements to the House are one-sided, incomplete and self-serving. The Government will now write to all MPs setting out the full facts of the matter. Mr Hain made his shameful remarks in answer to what was clearly a "planted question". It must therefore be assumed that he fully intended to discredit Gibraltar in this way.

The Government believes that both the content and timing of Mr Hain’s remarks are designed to discredit Gibraltar in order to reduce parliamentary and public support for our resistance to his proposed done deal on the principles affecting our sovereignty. The intention was obviously to make Gibraltar sound like a financial millstone around the UK taxpayer’s neck.

This is not the first time that sources close to Mr Hain seek to discredit Gibraltar in an attempt to win sympathy for his done deal on sovereignty principles. It will be recalled that recently his PPS, Caroline Flint MP, falsely accused Gibraltar on Sky News of being engaged in "smuggling on a massive scale".