PM leaps to defence of immigrants after Lords claim they do nothing for Britain

Gordon Brown says immigrants have added £6bn to the economyand concerns raised by the Lords are being tackled

Gordon Brown rejected the findings of a House of Lords inquiry yesterday and insisted that immigration is good for Britain, dismissing calls for a cap on annual numbers of immigrants.

The peers had found immigration had had "little or no" impact on Britain's living standards, questioning government claims that it had brought significant economic benefits. Its proposal for a ceiling on the number from outside the European Union echoes the Tory Opposition's policy.

But Mr Brown told his monthly press conference that migration had added £6bn to the economy and was a "substantial income". Most British businesses that have faced labour shortages had benefited from being able to recruit more widely for skilled labour, he added. He said concerns raised in the Lords report are already being tackled by a new, points-based system that will allow in only highly skilled workers from outside the EU and will bar unskilled immigrants.

Mr Brown agreed it was important to get the balance right given "pressures on the economy" from immigration. But he said gross domestic product per head had risen since 1997 from £13,900 to £22,840 in the past year. He said a cap on immigrants could be applied only to those outside the EU. "Most people who are proposing a cap are proposing a cap of only 20 per cent of possible migrants," he said. "Many of these people are the highly skilled workers who are important to the economy."

The Lords Economic Affairs Committee said competition from immigrants had had a negative impact on the low paid, on training for young British workers, and had contributed to high house prices. It said the Government "should have an explicit target range" and set rules to keep within that limit. They rejected as "fundamentally flawed" ministers' claims that a high level of immigration was needed to prevent labour shortages.

Labour is struggling to mobilise its natural supporters ahead of the 1 May elections to local councils and for Mayor of London. Their MPs fear a backlash as low-paid workers lose out when the 10p lower rate of income tax is abolished this week. Mr Brown failed to satisfy backbenchers at their weekly meeting on Monday. "Morale is falling apart," one minister said. Mr Brown set out his fightback plan to his Cabinet yesterday, presenting a report by his new chief strategist, Stephen Carter. It said Labour should fight on five key themes, health, families, immigration, stability and law and order. The "dividing lines" between Labour and the Tories should be public services versus spending cuts, economic stability versus risk and leadership versus salesmanship.

David Cameron, the Tory leader, said: " The problem with the Government is that it absolutely refuses to set any sort of limit on immigration. If you want to control immigration you have to control that bit of immigration you are able to control."

Sir Andrew Green, of the pressure group Migration Watch, said the Lords report had "torn to shreds the Government's economic case for the massive levels of immigration which they have actively encouraged".

But David Coats, the associate director of policy at The Work Foundation, said: "Unfortunately, the report's fair and balanced evaluation of the economic evidence is spoiled by the rather cavalier framing of the policy recommendations. The message seems to be 'accentuate the negative, eliminate the positive', leading to the conclusion that there are no benefits to be derived from the recent wave of migration."

Immigration rules around the world

Australia

Pioneers of the points-based system. Only those with a profession that appears on the Skilled Occupation List can apply for permanent residence.

United States

Since 1965, the US has set annual limits, at present a flexible 675,000 a year. But there are millions of illegal immigrants.

France

Tough rules drafted in 2006 by Nicolas Sarkozy, then Interior Minister, made it much harder for non-skilled, non-EU workers to get in. They must also sign a contract saying they will learn French.

Germany

Since 2005, Germany has set limits and made it very difficult for low-skilled, non-EU workers to get in.