THE Scottish National Party's ruling group on Tayside are attempting

to secure a private deal with Hydro-Electric that could more than halve

the 8% VAT element on electricity bills for benefit claimants.

The deal is believed to allow the region to buy pre-payment stamps

from the power company at 95% of face value. The cut-price stamps would

then be sold to the elderly and other eligible groups.

The SNP group yesterday refused to discuss a deal which will be a

major publicity coup for them and potentially a considerable discomfort

for Labour across Scotland.

It is known that the scheme -- which does not include gas payments --

could also be used in neighbouring Grampian region.

SNP officials are annoyed that details of the scheme have leaked

because negotiations with the power company are at ''a delicate stage''.

Party officials at headquarters said no statement could be made until

after a meeting of Tayside's social work committee on Thursday.

When the SNP captured Tayside region from Labour in May, they promised

pensioners and benefit claimants a one-off #10 cold weather payment.

They had to abandon the pledge after warnings from Tayside legal

officials that such payments may not be legal.

The SNP group are then believed to have met council officers to devise

a way to honour their promise. If the electricity power stamp deal

proceeds, it could lead to even larger savings than #10 off annual

bills.

A nationalist-inspired scheme cutting fuel bills would be a major coup

in the power struggle with Labour across Scotland.

Scottish Conservatives -- with the support of Mr Allan Stewart, the

Scottish Office Industry Minister -- still hope to persuade the

Chancellor of the Exchequer to abandon the 9.5% second stage of VAT on

fuel next spring.