The SNP has scrapped a controversial pre-election promise to give young people and families up to £50,000 to support island populations.
The decision follows a wide consultation and led to claims the plan was just a “gimmick” in the Holyrood election last year.
We exclusively revealed the SNP’s island bonds plan which formed a key part of Nicola Sturgeon’s pitch.
Last week, signs of a U-turn emerged with concerns ministers were on the verge of abandoning the policy.
The SNP’s rural affairs and islands secretary, Mairi Gougeon, announced the climbdown on Friday morning.
She said it had not been intended as a “silver bullet” to help rural communities facing an existential threat.
Lib Dem Orkney MSP Liam McArthur said the bonds policy was “ill-conceived” and failed to address the root causes of depopulation.
If the idea had been pushed through, 100 families would have been given up to £50,000 each in targeted bonds.
The plan aimed to help people buy homes, start businesses and settle for the long-term.
Statistics forecast areas such as the Outer Hebrides could see their population plummet in the next 20 years.
But many organisations claimed £5 million in investment from the government would not do enough to fix the crisis of residents moving away.
‘Ill-conceived idea’
Mr McArthur said: “The islands bond was always an election gimmick. Rather than tackling the root causes of depopulation, it risked opening up divisions within our island communities.
“This ill-conceived idea was not the brainchild of Mairi Gougeon, but thankfully the islands minister has had the good sense to listen to the overwhelming feedback from islanders and drop the proposals.
“I have repeatedly argued that there are far better ways to build the resilience of our island communities, through investing in transport links, broadband and affordable housing.”
Tory MSP Rachael Hamilton said: “This ditched scheme, trumpeted in the SNP’s manifesto, turns out – like so many of their policies – to have been no more than an eye-catching gimmick.
“The moment it was properly examined it became clear that it was a half-baked, ill-thought-out waste of taxpayers’ money unpopular with most islanders.”
Ms Gougeon said: “The Islands Bond was never intended to be a silver bullet to address our island population challenges.
“Rather, it was just one element of our wider work, across all Scottish Government, to support our island communities.”
Last week Ms Gougeon said a “new context” had been added to the government’s plans due to the cost of living crisis.
Many rural island communities have been hit hardest by soaring energy bills, putting further pressure on locals as they try to make ends meet.