The First Minister today launched a proposal to introduce a Scottish visa, to ensure Scotland's population and workforce were able to grow post-Brexit.
The plan would have seen no cap on immigration, and there were also no details as to how to ensure migrants to Scotland would not end up working in other parts of the UK.
But within hours of Ms Sturgeon unveiling the proposal, the UK government said immigration would remain a "reserved matter" and the new scheme being currently being created would apply to the whole of the UK, as introducing differentials would make the system "massively complicated".
A Home Office spokesperson said: “Immigration will remain a reserved matter. The UK Government will introduce a points-based immigration system that works in the interests of the whole of the United Kingdom, including Scotland.
“We want to understand the specific needs of the whole of the UK, which is why we have engaged extensively with stakeholders across the UK, including the Scottish Government.”
Boris Johnson's new immigration system will operate from 2021 and it is expected to be based on Australia's point-based immigration. The Migration Advisory Committee is expected to report shortly into how such a system would operate.
It is also reviewing the proposed £30,000 minimum salary threshold for migrant workers, and UK ministers have already signalled they are ready to drop the level after concern from business leaders that it could prevent workers needed to support the economy from entering the UK.
There are already UK-wide and Scotland specific "Shortage Occupation Lists" and Mr Johnson has said he wants a system based on applicants’ skills and qualifications as well as labour shortages.
He has said migrants will be sorted into three categories: exceptionally talented people such as “nuclear physicists”, who would be granted free entry; skilled workers, who could settle if they had a job; and unskilled workers who would only be granted short-term visas in sectors with skills shortages.
The Prime Minister's official spokesman also said it was unlikely that UK ministers would engage with the Scottish Government on the issue. "We're very clear that we want an immigration system that works for the whole UK," the spokesman said. "Immigration policy is a matter for the UK Government."
Today the First Minister admitted her government had not yet entered into discussions with the Home Office about how a "tailored" approach to Scottish immigration could work, but it had been "touched on" when they pair had met last summer. "We will be seeking to intensify that now we have published these proposals," she said.
She added that her proposals were necessary to address Scotland's depopulation - it has the lowest fertility rate in the UK - and to tackle skills gaps in the wake of Brexit.
It is predicted that if EU migration to the UK is halved the UK population would still grow by 7.7 per cent over the next 25 years, but the Scottish population would only increase by one per cent. It has also been estimated that Scottish GDP could by 4.5 per cent lower by 2040 as a result of lower migration compared to 3.7 per cent across the UK as a whole.
Ms Sturgeon said that the figures proved the "urgent need" to ensure immigration continued to Scotland. She said under the current constitutional arrangements, she wanted responsibility for immigration policy split with the UK government. Migrants who want to live and work in Scotland could choose to apply for a Scottish Visa, with residing in Scotland and maintaining a Scottish tax code the main requirements. They could also still apply through one of the UK immigration routes.
However, when asked how she could ensure that people applying for a Scottish Visa would remain in Scotland and not move elsewhere in the UK, she said the only tracking measure would be the Scottish tax code.
"Yes we can have discussions about what we do with the minority of cases where that might be different, but having that Scottish tax code as the building block is the most significant part. Part of it is also shifting our mindset and our perspective - the numbers of people who come to try and abuse the system are actually very small and we cannot allow the system to be driven by that as perhaps has been the case for too long."
Later, when pressed on the issue again, she added: "Of course there are points of detail to be worked through but there is nothing that is insurmountable in this if there's the political will there to do it. HMRC already operate the Scottish tax code and its up to HMRC as a government agency to implement government policies, but they would not be 'policing' it."
Ms Sturgeon said if a migrant's job came to end within the time of their Visa they wouldn't automatically have to leave Scotland, but details like that would be dealt with "in the system design".
"We don't start from the point of people coming to game the system, that's not the reality of people coming to work here. We don't design a system catering for the exception rather than the rule," she said.
Asked about whether there would be a cap on immigration numbers, given the policy paper suggests quotas could be set by agreement between the UK and Scottish governments, she said: "I don't favour arbitrary targets around immigration, we need to be able to attract what we need for the needs of the country and that's the starting point.
"We have deliberately designed this paper to open up the discussion about the detail of how this will work within a UK framework. We are willing to consult on these things, that's leaving open as much room for discussion as possible - my starting point is I don't favour arbitrary targets, but if getting to a point where a Scottish visa is to be agreed by the UK government requires some discussion around that I'm open to having that discussion. We're trying very hard to leave as much open to discussion as possible.
"One of the driving factors has to be the population statistics, what do we need to do to stop our population going into decline? And there are also regional requirements - there are parts of our country, rural areas in particular, and part industry requirements as well, sectors like tourism and hospitality who have specific needs, My in-principle position is arbitrary targets and quotas get in the way of that."
Ms Sturgeon also said she was aware there would be some "concern" about immigration in Scotland, but said it was her "duty to level with people" about why it was necessary.
She added: "I don't think this is an easy thing for politicians, it's not always a pain-free subject for politicians. But if I were not to make the case for immigration at best, or go along with anti-immigration rhetoric at worst, then I'm doing that knowing it would have real, damaging impact on Scotland's prosperity and it wouldn't be the right thing to do, and politicians should argue for the right thing even if it's difficult. It's also too easy to over-estimate the concern, I think there's a much greater awareness in Scotland of why this is important."