Humza Yousaf has announced a freeze in council tax bills next year to help with the cost of living, reviving one of the SNP’s most popular policies ahead of the general election.

The party last froze the tax in 2021/22 because of the Covid pandemic.

The First Minister also announced that the Scottish Government would try to borrow money on the international bond markets for the first time to fund infrastructure investment, saying it would help prepare the country for independence.

The Scottish Government consulted earlier this year on restructuring council tax, proposing that bills for Band E to Band H homes go up by 7.5%, 12,5%, 17.5% and 22.5% respectively in April.

The change, last done in 2017, would have affected around a quarter of all homes in Scotland and been on top of the local annual rises imposed by councils themselves.

However in his speech to SNP conference in Aberdeen, Mr Yousaf backed down in the face of growing opposition to the plan.

He said: “We can’t stop all the bills rising – but where we can act, we should.

“I’ve considered carefully what steps we can take to help.

“Council tax bills in Scotland are already hundreds of pounds a year lower than they are in England.

“We’re committed to fundamentally reforming local taxation and we will re-energise our work to do that.

“We have consulted on what level the council tax should be next year.

“And conference, we have reached our decision.

“I can announce to the people of Scotland that, next year, your council tax will be frozen.

“That’s the SNP delivering for people when they need it the most.”

Although the freeze will apply to all homes, backtracking on the structural change will be of most benefit to those in bigger homes and more affluent areas, despite Mr Yousaf promising to make tackling poverty his key mission as First Minister.

The SNP came to power in 2007 promising to replace council tax with a local income tax but the plan proved unworkable.

The council tax was frozen as a stop gap measure, but this lasted nine years until 2017, when it was replaced by capped increases.

The Scottish Government also paid councils £90m to freeze the tax again in 2021/22 because of the pandemic, but since 2022/23 local authorities have been free to raise bills by whatever they choose.

The return of the freeze in 2024/25 is likely to cost the Scottish Government around £100m if it compensates councils in full for lost income.

Mr Yousaf told delegates that as well as campaiging for independence he was preparing for independence by gearing up for life outside the Union.

He said that since 2014, the Scottish Government had set up institutions such as a new social security system, a tax agency, a national investment bank and offices overseas.

He said: “We are going to take further steps that will both provide direct benefits under devolution and will prepare us for independence. 

“The UK has a shocking record of capital investment.

“As First Minister, I am co-chair of the Scottish Government’s Investor Panel – made up of a group of distinguished experts. They’re challenging the Scottish Government to be bold.

“And that’s why today I am announcing our most ambitious proposal yet.

“I can confirm that by the end of this parliament the SNP Government will – subject of course to due diligence and market testing - go directly to the international bond market for the first time in our own right.

“To fund vital infrastructure like affordable housing projects, we will issue Scotland’s first ever bond.

“This will bring Scotland to the attention of investors across the world.

“And it will raise our profile as a place where investment returns can be made.

“In doing so, we will show the world not only that we are a country to invest in today.

“We will also demonstrate the credibility to international markets that we will need when we become an independent country.”

In a brief passage, he thanked his predecessor Nicola Sturgeon.

He said: “Nicola Sturgeon transformed Scotland. She reformed Scotland’s public services.

“The improved the life chances of thousands of Scotland’s young people.

“And we will never forget that in the toughest of times our country faced, Nicola was the calmest of voices and the coolest of heads.

“So for all of this and more, we say thank you Nicola.”

Alba party leader Alex Salmond, who had been calling for a council tax freeze, said:  "For a Government to act it must first listen. But listening to the people you serve should not be something you only do because you’ve suffered a large by-election defeat. 

“I cannot  fathom why the Scottish Government would have, in the backdrop of families struggling to make ends meet, contemplated a Council Tax rise for one in four households across the country.

“The Scottish Government... should immediately scrap the crazed notions of their Green partners to drastically increase council tax for households across Scotland and Humza Yousaf should also clarify that these plans are now scrapped."

Responding to the tax freeze, The TaxPayers' Alliance said: “Scottish taxpayers will breathe a sigh of relief at this announcement. 

“Council tax rises across the UK are compounding misery on households already grappling with the cost of living crisis. 

“The Scottish government should ensure that this is delivered sustainably through spending control to protect taxpayers in the long term.”