JOHN Swinney has announced spending on a second independence referendum will instead be used to support vulnerable people against soaring energy bills.

The acting Finance Secretary said the £20 million which had been earmarked for indyref2 would instead be spent on extending support for people suffering from fuel poverty, after the Supreme Court blocked a second poll.

Swinney said the Scottish Government still believed Scots had a right to vote on the country’s future.

Announcing the change, the Deputy First Minister told MSPs: "I intend to utilise the finance earmarked for a referendum on independence to meet provision to extend our fuel insecurity fund into next year, a further £20m to address yet another failure of the United Kingdom and its policies.”

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He pledged that, when the opportunity for another vote comes up, the "Scottish Government will make financial provisions for that to happen".

Swinney added that he "must make full use of the resources available" at this particular moment, which he noted was the "most turbulent economic and financial context most people can remember".

The £20m funding announcement sparked a row between the Deputy First Minister and Tory finance spokesperson Liz Smith, who was branded as being "obsessed" with the indyref2 budget. 

Smith said: "It is very good news indeed that finally the Scottish Government has withdrawn the £20m that was due for an independence referendum. But can I ask [Swinney] to confirm that as well as reprioritising that money, has he also reprioritised the activities of the 25 civil servants who were working on that?"

A visibly animated Swinney accused the Tory MSP of wanting the Scottish Government to follow the "foolish and stupid example" of Liz Truss's disastrous mini-budget. 

He added: "On this obsession that Liz Smith has got about the £20m for the independence referendum – she's absolutely and completely obsessed by the whole thing. I'm beginning to get worried about her obsession with that. 

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"I confirmed that in order to deal with the fuel poverty that exists in our country that people are wrestling with, the sky-high energy costs fuelled by the mismanagement of the UK's energy and economic policies by Liz Smith's allies in the UK, I am allocating that resource to support those in fuel poverty. "

"And surely the Tories could welcome that?"

But the decision has been slammed by the Alba Party, who said the Scottish Government were flying a "white flag".

Alex Salmond (below), the party's leader, said: "The people of Scotland were promised a referendum next year, no ifs no buts, and there is a clear democratic mandate for one.

The National: File photo dated 12/09/21 of Alex Salmond, who has said Nicola Sturgeon must set out a "plan of action" to prove she is serious about her pledge to hold an independence referendum..

"Today the Scottish Government have flown a white flag on that constitutional imperative when they should have been flying a Lion Rampant. 

"The Scottish Government’s decision to concede that there will now not be an independence referendum is even more bizarre considering that only yesterday the SNP led a debate at Westminster calling for one."

It came amid a furious stooshie between the Government and opposition parties after key details of the Budget, such as income tax increases for Scotland's highest earners, were leaked to the BBC

Swinney claimed he had not authorised anyone under his authority to brief the broadcaster on the Budget.

The acting Finance Secretary, covering for Kate Forbes who is on maternity leave, announced that while taxes would remain the same for most people, the higher rate and the additional rate would be increased by a penny each in the pound. 

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The higher rate will go from 41p to 42p in the pound while the top rate will be increased from 46p to 47p.

More people will pay the highest rate of income tax, Swinney announced, as the threshold for the additional rate will be lowered so anyone earning £125,140 or more will pay the top rate. 

He said: “We’re asking all those earning more than £43,662 to pay an extra penny in income tax.”

Swinney said the increase would allow for a substantial increase in health spending, telling MSPs that within a year, an extra £1 billion would be raised for health and social care.