MOTORISTS can expect further big falls in petrol prices into the New Year, the UK Government has predicted, as it called on Britain's airlines to pass on reductions in its fuel costs to passengers.

Danny Alexander, the Chief Secretary to the Treasury, admitted that, overall, the fall in oil prices was good for the British economy provided the benefits of reductions in fuel costs were passed on to consumers.

Noting how UK Government pressure on oil companies had already helped prices fall at petrol stations, the Cabinet Minister made clear there was more to do.

"With the oil price having fallen even more sharply in the last couple of weeks, there are significant further reductions at the pumps to come through in the run-up to Christmas and into the New Year. That's something that for most people in Scotland and for the Scottish economy as a whole is a good thing," declared the Highland MP.

But he stressed that there were other parts of the UK economy, where the benefit of falling oil prices could be felt.

Mr Alexander has already contacted the heating oil industry to urge it to pass on reductions to households and he is now targeting the airline industry.

"Many airlines have a so-called fuel surcharge on their ticket price. Even if they don't, the fuel is a big component of the price. We haven't been seeing those ticket prices reduced in the way I would have expected," explained the Chief Secretary.

So he has written to all the airline companies calling for them to pass on lower fuel costs to passengers. Yesterday, he hailed as good news for families the announcement by Virgin airlines that it was doing just this.

"It really is important whether it's at the pumps, airlines or other parts of the economy, that this falling oil price is not being retained as profit but is being passed on to consumers as quickly as possible.

"I have got the Treasury on alert to look out for sectors where this isn't happening," added the Liberal Democrat frontbencher.

Meantime, the "big four" supermarkets - Asda, Sainsbury's, Morrisons and Tesco - announced they were cutting their petrol prices again in the face of plunging oil prices by a further 2p a litre and diesel by another 1p a litre.

Today, the AA said petrol pump prices had plunged in the last month; the third biggest fall in 25 years.

The RAC has suggested the New Year could usher in petrol pump prices below £1 but the AA said this possibility remained "remote".