THERESA May has been urged to abandon immigration quotas and grant Scotland new powers to manage its borders to address its “particularly pressing” labour needs.

A landmark report by The House of Lords EU Committee acknowledges the political and economic case for Scotland adopting a “standalone approach” to immigration policy in light of its reliance on EU labour, which is vital in sectors such as health, social care, agriculture, food and drink and hospitality.

But the influential paper falls short of recommending that full control of immigration is devolved to Holyrood amid claims it is not the time to “embark on controversial domestic constitutional reform”. However, the Lords paper does call on the Prime Minister to “look for opportunities” to beef up the role of devolved institutions in managing EU migration.

The 90-page document – which draws on views from experts, peers and leading politicians – also notes that relations between the governments in London and Edinburgh have become “highly strained” and warns Brexit poses a “fundamental challenge” to the future of the United Kingdom.

A key recommendation of the document Brexit: Devolution insists: “Local and regional economic and demographic needs, rather than central targets, should drive decision-making.”

It further urges the UK Government to “respect the particular circumstances in Scotland”.

“While we acknowledge the referendum was a UK-wide vote, giving a UK-wide result, the Government needs to recognise the fact that the vote to remain in Scotland, at 62 per cent, was the largest and most decisive (either in favour of remaining or leaving) in any nation of the UK,” it adds.

“We therefore consider that, in the event that the UK Government does not secure a UK-wide agreement that adequately reflects Scotland’s specific needs, there is a strong political and economic case for making differentiated arrangements for Scotland.”

While the difficulties enforcing a separate immigration policy for England and Scotland were highlighted, Jim Wallace, Baron of Tankerness, suggested employers could play a key role by using national insurance numbers to check people’s employment status.

This would mean “that someone who turned up in England who had been given their number in Scotland would be spotted immediately because that number would be known”.

In his appearance before the committee, the Scottish Government’s Brexit Secretary Mike Russell stressed the importance of immigration to the Scottish economy, revealing how almost one-quarter of workers in cutting-edge research in the NHS in Scotland came from other EU countries. He said: “There is a view in Scotland that this has been a good thing; we regard migration as positive for us.”

Academic evidence underlined the demographic challenges facing Scotland, with Professor Boswell, director of research, social and political science at Edinburgh University, explaining: “EU immigration since 2000 is estimated to have contributed 50 per cent of net population growth in Scotland, which is a more significant contribution compared with the rest of the UK”.

In a further recommendation, the committee said it was now time for the UK Government to “bite the bullet” and replace the 40-year-old Barnett Formula, which is based on population, with one based on need.

The report points to an enhanced role for the intergovernmental Joint Ministerial Committee[JMC].

However, as The Herald reported last week, the political impasse in Northern Ireland has meant this process has ground to a halt. Instead, Whitehall has approached Nicola Sturgeon’s administration to establish a series of bilateral summits to ease Brexit strains and help co-operation on the flagship EU Withdrawal Bill. The first meeting could take place in Edinburgh next month.

Tensions have risen between London and Edinburgh after First Minister Nicola Sturgeon described the flagship EU withdrawal bill as a “power grab” and made clear she could not recommend Holy- rood consenting to it; thus,