PLANS to allow skilled student migrants to remain in Scotland after graduating have been torpedoed by the UK Government despite widespread backing for the move.

SNP ministers, universities and businesses have called for the return of a post-study work visa system north of the border, which would hand international students from outside the EU special permission to remain in the country and work for a limited period.

Advocates believe reintroducing the scheme, which was axed by the UK Government in 2012, would boost the economy and society by retaining those with "world-class talent" who would otherwise be forced to leave. A survey completed last year found that 85 per cent of Scottish businesses and all educational institutions supported the move, which would see those who establish successful careers able to apply to stay permanently after the temporary post-study period expires.

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However, Scottish Secretary David Mundell said in a written statement at Westminster that UK Government had "no intention" of allowing Scotland to bring back the visas, despite the Smith Commission saying that the possibility of introducing schemes to allow international students to remain in Scotland should be examined.

Mr Mundell said that existing UK-wide schemes for international graduates were "excellent" and that the Conservative government, which has failed to hit its own targets for curbing immigration, would continue to welcome "genuine" international students.

The Scottish Secretary was accused of "utter hypocrisy" by SNP international development minister Humza Yousaf, after quietly making the announcement on the same day that he delivered a major speech in Edinburgh in which he hailed the scale of the new powers destined for Holyrood.

Universities Scotland expressed disappointment at Mr Mundell's position, saying there is "overwhelming evidence" that a more attractive post-study offer would bring economic, societal and educational benefits.

Jack McConnell, the Labour peer who as First Minister brought in the 'Fresh Talent' initiative which saw international graduates in Scotland offered two-year visas as part of a scheme designed to halt a declining population, also hit out at the move.

The Fresh Talent scheme, which was launched in 2004 with Home Office approval, saw almost 8,000 students granted visa extensions in Scotland between 2005 and 2008. It was then brought into the UK system with the two-year offer made across Britain until 2012.

Lord McConnell said: "From 2005 onwards it was a huge success for the individuals, for our Higher Education institutions, and absolutely for our economy and the country. It brought fresh talent to Scotland who stayed.

"I think it is desperately disappointing, when all the evidence points to the success of the scheme in transforming Scotland, growing the population, increasing economic and educational activity, that the Government has decided not to bring it back.

"There are two things, nearly 10 years on from being First Minister, that strangers cross the street to thank me for. One is the smoking ban, the other is the Fresh Talent initiative. Just three weeks ago a complete stranger approached me on a tube train to say it had changed his life."

The announcement, part of an update on areas in which the Smith Commission had stopped short on making firm recommendations, took many in the sector by surprise. One source said that positive discussions over the re-introduction of an international student visa scheme had taken place as recently as a few weeks ago.

A spokeswoman for Universities Scotland, which represents the country's 19 higher education institutions, said of Mr Mundell's statement: "These comments are naturally disappointing but we will seek to understand, from the Scotland Office, the context in which they are made. We remain committed to working with the Scotland Office, and with the UK and Scottish Governments, in pursuit of a change of policy on post-study immigration for international students, as we think it has the potential to deliver significant benefits for Scotland."

Mr Yousaf, who chaired a cross-party working group on post study work visas which last year recommended that a scheme was reintroduced, said he was "deeply disappointed".

He added: "Scotland has different immigration needs to the rest the UK. There is consensus in Scotland, across parties, in business and in education, that we need a return of the post-study route to allow talented students to remain and contribute to the Scottish economy.

"By ruling out a return of this route, the UK Government has ignored this consensus, and has dismissed Scotland’s call to positively and meaningfully engage on this issue. It is utter hypocrisy for David Mundell to say the UK Government have delivered at the same time as admitting he has fundamentally failed to deliver this key economic policy."

Mr Mundell said visa applications to study at Scottish universities were 11 per cent higher than they were in 2010 and that controlling migration and increasing genuine student numbers are "compatible aims."

He added: "The UK has an excellent post study work offer for graduates of Scottish universities seeking to undertake skilled work in the UK after their studies. The Smith Commission did not recommend that the two Governments discuss the re-introduction of the former Tier 1 (Post Study Work) visa, and there is no intention to do so."