Millions of pounds in winter fuel payments are being handed out to thousands of British pensioners living in the Mediterranean.

MILLIONS of pounds in winter fuel payments are being handed out to thousands of British pensioners living in the Mediterranean.

Now ministers have been called upon to review the benefit which sees nearly £8m paid out in the past year, with more than 30,000 payments going to residents in countries such as Spain.

In a written parliamentary answer, James Purnell, former work and pensions minister, revealed an exponential rise in the number of recipients living abroad over the past five years, boosted by the fact that 10 countries such as Cyprus and Malta joined the EU in 2004. In Spain, there have been nearly 78,000 payments in the past five years.

The tax-free winter fuel payment is payable from November to most Britons over the age of 60. It was introduced in the winter of 1997-98, at £20 for a single householder. Today, however, it is £200, or £300 if a person is over 80.

British pensioners living abroad are entitled to the payment if they reside in a country within the European Economic Area (EEA) - which covers the 27 EU member states as well as Norway, Iceland and Liechtenstein - together with Switzerland, and were eligible for the benefit when they lived in the UK.

The benefit is meant to help pensioners "keep warm in winter". The average winter temperature in Spain and Cyprus is around 11C, compared with 3C in Scotland and 4C in England.

The qualifying period for the payment for this coming winter is in September but, if past experience is anything to go by, there will be even more overseas recipients than last year. Given Bulgaria and Romania are now EU members, former eligible UK residents living there will qualify.

The figures show that by far the largest number of overseas recipients live in Spain. In 2002-03, some 5165 payments were made. But, by last year, this had jumped to 24,695. The total amount for 2006-07 was £3.9m.

A similarly large rise has been recorded in Portugal, where over the same period the number of payments has risen from 105 to 910. Last year's total was £149,000.

There have also been rises in countries such as Ireland and France. In the former, some 660 payments were made in 2002-03, but by last year there were 4375, when the total payout was £737,000.

Over the same period in the latter, the numbers were 1780 and 11,505, with a total for 2006-07 of £1.8m. The accession of 10 new countries to the EU in 2004 meant that pensioners who live in these member states are now eligible.

So, for example, in 2004-05 there were 1395 payments for Cyprus but by last year there were 3005 with a total payout of £471,000. On Malta, the equivalent numbers were 265 and 570 with a total for last year of £93,000.

Alistair Carmichael, the Liberal Democrat MP for Orkney and Shetland, called on the new Prime Minister to review the payment to overseas residents living in warm climes.

Commenting on the rises in overseas payouts, he told The Herald: "This is by anyone's standards a substantial amount of money, which seems to defeat the purpose of the benefit being made available.

"The Treasury should be looking in some way at how this issue can be addressed."

A spokesman for the Department of Work and Pensions said: "European Community law means that some benefits acquired in one member state must be paid to people when they move to another country within the EEA. The winter fuel payment is only paid to former UK residents living in the EEA if they qualified for it before leaving the UK.

"We must treat all those states equally and may not, therefore, make payments based on winter temperatures."