April 1 (Bloomberg) -- Prime Minister Gordon Brown should cap immigration because Britain hasn't seen substantial economic benefits from the record influx of foreigners over the past decade, a panel of lawmakers said.

The House of Lords' Economic Affairs Committee rejected the government's argument that the arrival of 1.5 million new residents from overseas since 1997 has boosted economic growth. The cross-party panel largely endorsed the policies of the Conservative opposition.

The 84-page report's findings call into question the Labour government's open-door policy. Unlike Germany, France and Italy, Britain allowed residents of the 10 nations that joined the European Union in 2004 to work in the U.K. without restriction.

``We do not believe there has been any great economic benefit from this,'' John Wakeham, a Conservative member of the House of Lords who leads the panel, told journalists. ``It's not a good idea to continue a policy that doesn't make sense.''

Brown has already begun to retreat from Labour's permissive immigration rules, imposing an Australian-style points-based system to encourage skilled workers to migrate and keep out ones with little education and training. He has also imposed new taxes on overseas workers and made it harder to earn citizenship in Britain.

``Most people in the City of London know that we benefited very substantially'' from migration, Brown said today at a press conference in London. ``But we want to get the balance right. We have introduced a point system that will restrict the numbers of people who can come into this country. We have taken most of the action that the House of Lords committee is suggesting.''

Union View

Unions that fund the Labour Party praised the report and said it should prompt the government to step up enforcement of immigration laws.

``Rogue employers are exploiting newly arrived migrants, undercutting workers who have been here for generations,'' said Jack Dromey, deputy general secretary of the Unite union, which represents 2 million workers.

A record 591,000 immigrants arrived in the U.K. in 2006, with more than two-thirds coming from outside the European Union, according to the Office for National Statistics. That stoked concern that the influx is causing overcrowding in schools and on public transit systems and making housing increasingly unaffordable.

Voter Concern

After crime, immigration was the biggest concern among voters in February, with 44 percent saying it is the most important issue facing Britain, according to a monthly survey by Ipsos Mori Ltd.

While the addition to Britain's workforce helped the economy expand, that growth did little for people already living in the country, the committee said. There was a ``largely neutral'' impact on gross domestic product per capita, the report said.

``The government's use of impact on overall GDP as the key measure is preposterous and irrelevant because it does not reflect the economic well-being of the existing population,'' said Wakeham, a former Conservative Cabinet minister who was named a member of the House of Lords in 1992.

Immigration Minister Liam Byrne disagreed. ``Migration adds a lot of money to the economy, it's good for GDP per capita,'' he told BBC Radio 4's Today program. ``Migrants pay in more in tax than they take out in public services.''

Even so, he said his department is looking at ways to make newcomers to the U.K. ``pay just a little bit extra towards public services before they become citizens,'' he said.

The 16-member committee that scrutinizes economic policy includes five Conservatives, five Labour lawmakers, two from the Liberal Democrat party and four ``crossbench'' members who aren't affiliated with any party. Among them are two former Chancellors of the Exchequer, Norman Lamont and Nigel Lawson, as well as one former governor of the Bank of England, Robin Leigh-Pemberton.

To contact the reporter on this story: Mark Deen in London at markdeen@bloomberg.net.

Last Updated: April 1, 2008 07:38 EDT