Upbeat Alexander tries to shrug off abject sixth place in by-election

The Inverness MP is driving the coalition government's unpopular cuts agenda at Westminster, and he claimed Scottish voters recognised the party was taking the tough decisions needed to tackle the country's deficit.

He insisted party leader Nick Clegg was still a vote-winner north of the Border and urged against reading too much into the Barnsley defeat.

"The next Scottish Government is going to have to take some difficult decisions of its own," he said at the party's spring conference in Perth.

"You've got a Labour Party which caused a great deal of the problems, you've got an SNP government which dodged many of the things that need to be done and I think people in Scotland see the Liberal Democrats stepping up to the plate, taking responsibility, putting forward solutions to those problems. That's what Tavish Scott and his team are doing here this weekend."

As expected, Labour cruised to a resounding victory in the Barnsley seat vacated by the resignation of its former MP Eric Illsley, who was jailed last month for expenses fraud. New MP Dan Jarvis, a former army major, increased Labour's majority from 11,093 to 11,771 (60.8 per cent of the vote), on a turnout of just 36.5 per cent.

The Lib Dems' vote share tumbled from 17.28 per cent to just 4.18 per cent, and their Tory coalition partner's from 17.26 per cent to 8.25 per cent, as the UK Independence Party claimed second place.

Lib Dem candidate Dominic Carman said: "The voters in Barnsley have given me and the Lib Dems a kicking. We can take it."

Mr Alexander rejected claims the by-election humiliation had overshadowed the conference and defended the voter appeal of the Deputy Prime Minister, a close political ally. "Nick Clegg is a huge electoral asset for our party and he's a huge asset for the country too," he said.

But the SNP's Scottish election campaign manager Angus Robertson said the Barnsley result would "hang over this weekend's Lib Dem conference in Perth like a dark cloud".

Mr Clegg accepted the result was bad for the Lib Dems but vowed not to be blown off course. "We will continue to do what is absolutely vital for the long-term benefit of the country - namely sort out the economic mess we inherited from Labour," he said.

Mr Alexander had earlier confirmed plans to cut fuel duty by 5p in island and remote communities during a question and answer session with delegates in Perth - during which the by-election reverse wasn't mentioned.

He said: "We will be submitting a formal application to the European Commission to deliver a 5p discount on fuel duty for Highland communities, the Northern Isles, the Inner and Outer Hebrides, the islands of the Clyde and the Isles of Scilly too.

"These are places, more than anywhere in the country, feeling the pressure of high fuel prices."