* Scottish government seeks vote in late 2014
* London wants referendum held as soon as possible
* Fears uncertainty is “damaging” Scotland’s economy
By Adrian Croft
LONDON, Jan 10 (Reuters) - Scotland’s devolved government said on Tuesday it wanted to hold a referendum in late 2014 on breaking away from the rest of Britain, setting up a clash with London which wants the vote held as soon as possible to dispel uncertainty.
The Scottish and British governments began playing a cat-and-mouse game over the future of the 300-year-old union between Scotland and England, with London saying the Scottish parliament had no legal authority to call a referendum on independence.
Trying to seize the initiative from pro-independence Scottish First Minister Alex Salmond, London said it would allow Scotland to hold an independence referendum but only on terms acceptable to it.
Salmond’s Scottish National Party won a majority in Scottish elections last year, putting him in a strong position to push for a referendum on independence which is opposed by British Prime Minister David Cameron and other major British parties.
Salmond, who has previously said a referendum should be held between 2014 and 2016, said on Tuesday the Scottish cabinet wanted the vote held in the autumn of 2014.
“This is the biggest decision in Scotland for 300 years. This has to be a referendum which is built in Scotland ... and then is determined by the good sense of the Scottish people,” he told Sky News.
Commentators say Salmond wants a later poll hoping support for independence in Scotland, currently running at around 38 percent, will build.
Some reports say the party hopes to exploit two events in 2014, the Commonwealth Games in Glasgow and the 700th anniversary of the Battle of Bannockburn when the Scots vanquished an English army, to create momentum for a breakaway.
Cameron says uncertainty over Scotland’s future is damaging investment in the Scottish economy and wants the referendum “sooner rather than later.”
The British government said on Tuesday the Scottish parliament had no power to call a referendum on independence and said it risked being struck down by the courts.
It offered to grant the Scottish parliament the power to hold a referendum but said it wanted it held promptly.
“It is essential that the referendum is legal, fair and decisive. As a government, we have been clear ... that we will not stand in the way of a referendum on independence. But neither will we stand on the sidelines and let uncertainty continue,” Michael Moore, the British minister responsible for Scotland, told parliament.
A British government source said London believed a referendum could be organised within 18 months.
London wants only one question on the ballot paper, a yes or no on independence, ruling out a second question on granting more powers to the devolved Scottish government that voters wary of full independence might opt for.
Salmond said Scots objected to the conditions that the British parliament was attempting to attach to the referendum.
“The prime minister (Cameron) in the last 48 hours ... seems to be saying here’s the power but incidentally we are going to start pulling the strings,” he said.
Cameron’s centre-right Conservatives are weak in Scotland, with only 15 seats in the 129-member Scottish parliament.
The British government gave people two months to give their views on the referendum and invited the Scottish government for talks to try to agree on a way forward.
Scotland, which kept its own legal system after the 1707 union, has had a devolved government since 1999, with control over health, education and prisons in the nation of five million.
Scotland has many of the trappings of an independent nation - its own flag, sports teams and a history of achievements in science and literature.
The SNP argues that Scotland would prosper as a small country in its own right. Salmond told Reuters last year that Scotland would be entitled to the lion’s share of North Sea oil revenues if it went its own way.
He also wants Scotland to have its own forces and foreign policy, rejecting nuclear submarines based close to Glasgow.