THE Scottish Government has confirmed it is poised to drop its flagship plan for an independence referendum in this parliament, despite spending three and a half years preparing for the vote.
First Minister Alex Salmond is set to abandon plans to put his referendum bill before MSPs and will instead appeal directly to the electorate to back the need for a vote on independence at next year's Holyrood election.
The strategy was unveiled to Nationalist MSPs last week and will be discussed at a Cabinet meeting tomorrow.
The SNP had pledged to hold a referendum before the 2007 election, with a preferred date of St Andrew's Day, on 30 November, this year.
But with any bill expected to be voted down by opposition parties in Holyrood, Mr Salmond is instead planning to "appeal over the heads" of the Labour, Liberal Democrat and Tory parties and try to get the electorate to support a vote on independence.
A spokesman for the First Minister said: "Tactically, we are deciding whether to introduce a bill to allow the unionist parties to vote it down or rather to publish the bill and concentrate on canvassing public support.
"A new, re-elected SNP government will be in a powerful position to secure passage of the referendum, having successfully mobilised the people over the blocking tactics of the unionist parties."
The plan to save the Nationalists' referendum policy was announced by the SNP leader during an away day of his party's MSPs at a Perth hotel.
The news was met with derision by opposition parties, who accused him of "squandering" millions of pounds of taxpayers' cash in promoting a plebiscite on independence since he came to power in May 2007.
The row came as Mr Salmond was dealt a fresh blow, with a new opinion poll putting Labour ten points ahead of the Nationalists.
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"We are discussing our strategy to make the referendum the transcending issue of the election, to demonstrate that financial independence is the only alternative to a decade or more of Westminster-dictated cuts," Mr Salmond's spokesman said. "The meeting of MSPs last week was part of that discussion, as will be the Cabinet meeting on Tuesday."The SNP narrative is to make the essential link between constitutional progress for Scotland, and the economic and financial powers we need for the Scottish Parliament to grow the economy and increase revenues to invest in vital public services."
Mr Salmond's spokesman went on to accuse the Labour, Lib Dem and Tory parties of "hypocrisy" over their stance on the referendum issue.
He said: "It is clear that we will now have to appeal over the heads of the unionist MSPs to the people of Scotland next May.
"The London parties have already said that they would vote down the right of the people to decide, despite the ludicrous position of the Tories and Lib Dems in wanting a referendum on an AV voting system that no-one supports on Scottish polling day - and the Labour Party, Tories and Lib Dems all pursuing a referendum next spring on more powers for Wales, while denying a referendum for Scotland."
He went on: "The hypocrisy of all the London parties will be well and truly exposed, as will their lack of any coherent policy to generate new wealth to offset public spending cuts.
"In these circumstances, we wish to make the right of the people to have their say on independence, and the absolute requirement for economic and financial powers for Scotland's Parliament, the transcending issue of the election campaign."
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However, the latest YouGov survey held bad news for the SNP, suggesting a drop in their support ahead of next year's Holyrood elections.
In the poll of 1,000 people, Labour received the backing of 39 per cent of Scots in the constituency vote, with the SNP trailing on 29 per cent. Results for the regional list put Labour on 36 per cent and the SNP on 26 per cent.
But another poll by the same firm showed 31 per cent of more than 1,300 voters interviewed backed Mr Salmond as the "best qualified" of all the party leaders to be First Minister.
Mr Salmond's approval rating compared with 9 per cent each for the Labour and Tory leaders at Holyrood and 4 per cent for the Lib Dems' Tavish Scott.
The latest referendum setback for Mr Salmond comes after the SNP was forced to ditch other flagship policies, such as abolishing council tax.The party is also likely to have its plans to introduce a minimum unit price for alcohol blocked by opposition MSPs later this year.
Mr Salmond published details in February of the two-question referendum, which would cost about 9.5 million, in the form of a draft bill.
The first question would see voters asked if they backed increasing the powers of the Scottish Parliament.
In the second question, people would be asked if they agreed that "the parliament's powers should also be extended to enable independence to be achieved".
But the proposed bill has been consistently opposed by the Tories, Lib Dems and Labour, who have the combined voting muscle at Holyrood to reject the measure.
The other parties accused the First Minister of running scared and said he had been humiliated over the independence vote "climbdown".
Scottish Labour leader Iain Gray said: "Alex Salmond's bill has turned into a white flag rather than a flagship policy.
"This climbdown is a humiliation for him and embarrassment for his government."
Lib Dem finance spokesman Jeremy Purvis said: "Now that the SNP have dumped every major promise that they made in 2007 by jettisoning the referendum, they should be utterly ashamed of wasting millions of taxpayers money during a recession on a pointless 'national conversation' and preparation for a scrapped referendum."
Scottish Conservative leader, Annabel Goldie said: "Alex Salmond has squandered millions of pounds of taxpayers' money chasing a minority aspiration of his minority party. Now he is running scared.
"The SNP has abused public cash to run a four-year-long party political campaign."
However, Mr Salmond defended his position and insisted a referendum on independence was the only way Scotland could be protected from "Westminster-dictated cuts".
But the row over the use of public money to promote an independence referendum that is now unlikely to be held rumbled on.A Taxpayers' Alliance spokeswoman said: "Scottish taxpayers will be furious that, after so much money has been spent promoting independence, that it looks like there won't be a vote on the issue.
"The government should not be squandering taxpayers' money on this if it is not serious about it."
David Lonsdale, assistant director of CBI Scotland, said business leaders "would not be too upset" if the referendum did not go ahead before the election.
He added: "The overriding message has got to be that the policy programme should focus above all on the economy."
The First Minister's spokesman denied that the SNP had wasted millions of pounds of taxpayers' cash on promoting independence and insisted that the cost of the Scottish Government's "national conversation" - which covered the option of more financial powers for Scotland as well as independence - was 400,000 so far.
However, the 400,000 did not include staff costs, which, according to figures obtained by the Labour Party, last year stood at more than 1.5 million over two years.