SNP and Plaid Cymru bid for fuel cost action defeated

The UK government is considering how to tackle the issue of high fuel prices

A Scottish and Welsh bid to pressurise the UK government into taking action on rising oil prices has been defeated.

The SNP and Plaid Cymru wanted UK ministers to introduce a scheme called ''fuel duty derogation'' that would allow fuel duty paid in rural areas to be less than higher population areas.

The parties made their case during a Commons opposition debate, however, the motion was defeated by 303 to 14 votes.

The SNP has vowed to make the issue a key Holyrood campaign.

The SNP and Plaid Cymru had said the coalition needed to push ahead with its consideration of a regulator to cut fuel duty when oil prices rise.

Prime Minister David Cameron is looking at sharing the risk of higher fuel prices between government and drivers.

Opening the debate, the SNP's Westminster Treasury spokesman, Stewart Hosie, said high fuel prices were causing real hardship in many parts of Scotland.

Treasury Minister, Justine Greening, said the government fully accepted that high fuel prices were a problem for many.

'Massive hike'

She said ministers were in talks with the European Commission and were committed to introducing a pilot scheme that would deliver a discount of up to 5p a litre in duty in remote rural areas.

It is hoped such a scheme would benefit areas such as the Inner and Outer Hebrides, the Northern isles and the Isles of Scilly.

She suggested that the Scottish and Welsh administrations should consider alleviating the high costs of fuel from their own budget "to fund their own form of grant scheme to support motorists in their areas."

Ms Greening said the Chancellor would update MPs on the latest developments during the budget, next month.

Meanwhile, with fuel costs at a record high, the UK government is facing calls to scrap a planned duty increase in April.

Mr Hosie said rural and island areas were being hit particularly hard by the costs.

"A fuel duty regulator - which the Tories supported before the election - would bring duty down when oil prices go up," he said.

"Cutting fuel by 10p per litre in Scotland would only cost about half of the estimated £1bn in extra revenue the Treasury is set to rake in as a result of rising oil prices."

After the debate Mr Hosie said: "It is simply unacceptable that in energy-rich Scotland, motorists and businesses are facing pump prices that have reached over £1.40 a litre in some areas.

"Coupled with the UK government's recent VAT rise, these record fuel costs are putting a huge and unnecessary amount of pressure on our communities and on vital sectors of the Scottish economy."

Plaid Cymru transport spokesman Jonathan Edwards MP added: "There has been a massive hike in the cost of fuel recently, not all of it down to the rising cost of oil.

"The Tory-led government's VAT increase and fuel duty hike have pushed the price of a litre up by at least 3.5p in the last month alone."

In Scotland, the SNP government has said North Sea oil revenues, worth £12bn in tax money to the Treasury, could be used to give motorists relief at the pumps.

The Conservatives have previously looked at the possibility of a regulator, which would also see fuel duty increase when oil prices fall.

Mr Cameron previously said: "Is there a way in which when the oil price goes up, if the Treasury is getting more revenue out of that oil, can we find a way of sharing that risk with the consumer, ie if the price goes up, the tax comes down, and if the price goes down, the tax goes up?"