THE Home Office has blocked Nicola Sturgeon's Scottish visa pilot which would have allowed businesses in remote and rural communities an exemption from UK immigration rules over hiring EU and other foreign nationals.

Ministers in Edinburgh wrote last month to their counterparts in London to seek approval for the scheme which would have enabled firms to recruit staff from overseas who earned less than the required threshold to obtain a visa under the government's regulations.

Sectors which have considerably relied on employees from eastern Europe and other parts of the EU, have struggled to fill vacancies with the problem more acute in the Highlands and Islands.

The pilot proposed that firms would sponsor foreign nationals for four years during which they would be obliged to live in a more remote community. Afterwards, restrictions would be lifted and the workers would be free to life anywhere in the UK. However, they would be "strongly encouraged" to settle in the area where they arrived.

Constitution Secretary Angus Robertson hoped the scheme would help businesses attract new employees and reverse some of the population decline affecting more remote parts of Scotland.

However, with immigration powers reserved to Westminster, the Scottish Government had to get their proposals supported by the Home Office before they could be implemented.

Last week a spokesman for the Home Office insisted immigration is a matter reserved to the UK Government and that the post Brexit points based system "works in the interest of the whole of the UK". He said the Scottish Government should use its devolved powers to tackle depopulation.

It is also understood there were concerns workers from overseas recruited under a Scottish visa pilot would move into towns and cities at the end of the four year period.

A UK Government spokesman said: "Immigration is a UK Government reserved matter and the points based immigration system works in the interest of the whole of the UK.

“De-population in Scotland is neither caused nor can be remedied by immigration. As the independent Migration Advisory Committee has noted, rural areas may struggle to retain migrants for the same reasons as with the local population. Investment in jobs and infrastructure – which devolved administrations have powers to address – must be considered.”

A source added: "The independent Migration Advisory Committee (MAC) have noted migrants may not want to stay in remote areas for much the same reasons as the areas struggle to retain those who are born there.

"Such areas must be able to attract and retain people from within the UK as well as from overseas. The reasons for local workers leaving must be addressed and immigration must be considered alongside investment in jobs and infrastructure; such as roads, schools and health facilities which the devolved administrations have powers to address."

Kirsten Gow, board member of the Scottish Islands Federation, hit out at the Home Office's decision.

“We welcomed the opportunity to be a part of the Scottish Government’s process to design a Rural Visa Pilot proposal that we felt could work well across Scotland’s diverse rural and island areas as part of an ambition to tackle depopulation and realise the true potential of these places.

"While efforts to tackle depopulation need to be multi-stranded, there is clear evidence to suggest that in-migration, alongside population retention, will be crucial to population maintenance and sustainable regrowth across many of these areas. Re-examining migration, as well as tackling housing and infrastructure issues, is therefore key. Given this, we are disappointed that the UK Government has chosen to reject the proposal and would call on them to reconsider how such a scheme could be an active and important part of the levelling up agenda.”

The Scottish visa pilot was drawn up by rural affairs secretary Mairi Gougeon and Europe minister Neil Gray following a fall in the population of the Highlands and Islands.

In 2019, the share of the working age population in rural areas was between six and seven per cent below the Scottish average putting additional pressures on firms trying to hire.

The latest Highlands and Islands Enterprise Business Panel Survey, published in October 2022, found employers in remote rural areas were more likely to perceive certain risks to their workforce such as lack of temporary or seasonal staff and skills shortages.

It reported 70 per cent were experiencing workforce related challenges with unfilled vacancies being among the key problems. Some 21 per cent cited being unable to recruit from the EU as an issue. Tourism businesses and those in remote rural areas were less confident than average.

Many jobs in care homes, hospitality and farm work do not meeting the required salary thresholds set by the UK Government to allow foreign nationals to take up posts in Britain. Minimum salaries set by the Home Office vary depending on the sector.

Prior to Brexit, freedom of movement across the EU allowed EU nationals to work in Scotland and elsewhere in the UK without the need for a visa.

Ministers in Edinburgh believe the new Scottish visa plan could be implemented within the current UK immigration system.

The proposed Scottish Rural Community Immigration Pilot (SRCIP) was modelled on a Canadian scheme designed to boost the population of its rural areas.

"The SRCIP would present a distinctly new, community-driven and employer-based migration route. It would offer a world-leading approach to spread the benefits of immigration to smaller communities, enabling migration – based upon genuine employment opportunity – which would meet the economic and societal needs of a specific community," the document said.

Under the scheme employer-sponsors taking part within designated geographic areas referred to as Community Pilot Areas would be able to advertise vacancies overseas.

Employers could then assess prospective candidates, before recommending them to the Home Office for final approval and security checks.

First Minister Nicola Sturgeon first unveiled her plans for a separate Scottish visa scheme in 2020 with the proposals being welcomed by NFU Scotland.

Unveiling the pilot scheme Ms Gougeon said last week: “The proposal sets out exactly how a bespoke immigration solution could be delivered at a local level in Scotland, now. These are interventions that can work in Scotland, just as they have worked in Canada.

“We believe that an independent Scotland would be best placed to deliver an immigration system which would meet Scotland’s needs. But employers, businesses, and communities are all telling us that actions are needed now."

Ms Gougeon has not received a reply to her letter sent to the Home Office on September 27.

But responding to comments given to the Herald on Sunday by the Home Office, Mr Robertson appealed to the UK Government to engage with ministers.

“We know that migration is not the only lever to tackle population and workforce challenges but it has a critical role to play. We are working collaboratively, with both Cosla and local authorities, and through structures such as the Convention of the Highlands and Islands, and the Convention of the South of Scotland, to make sure we have a partnership approach which best addresses our population challenges, particularly in our rural and island communities," he said.

“The Rural Visa Pilot proposal reflects the needs expressed by communities affected by acute workforce shortages – exacerbated by a damaging Brexit. We have proposed a workable and practical pilot scheme to address these challenges, with proper evaluation built in. The proposal has been endorsed by local authorities, business partners and across the majority of parties in the Scottish Parliament. We call on the UK Government to engage with us and our partners on this and work collaboratively to help deliver this pilot scheme.”