Many white working-class people across the country feel their concerns about the impact of immigration are being ignored, according to the communities and local government secretary, Hazel Blears.

Politicians need to start reconnecting with this group of people, Blears said today, as a study of attitudes to immigration was published finding a widespread sense of resentment, unfairness and disempowerment among white working-class communities in England.

"White working-class people living on estates sometimes just don't feel anyone is listening or speaking up for them," Blears said.

"Whilst they might not be experiencing the direct impact of migration, their fear of it is acute." It was the responsibility of politicians to challenge the myths about immigration spread by the far right, she said.

A report for the Department for Communities and Local Government based on interviews with people living on estates in Birmingham, Milton Keynes, Thetford, Runcorn and Widnes, found that some people believed that the same rules were not applied to everyone equally.

Anecdotal evidence suggested many believed refugees and single mothers were more easily able to find a council house than working-class white people whose families had lived in the area for generations.

People taking part in the focus groups said that when white people complained they were told that the system was fair and their concerns were racist.

Blears said that changes in communities could generate unease and uncertainty and needed explaining, otherwise the myths that currently surrounded the treatment of ethnic minorities "jumping the queue" would become harder to shift.

The report found that some members of the white working class felt "betrayed" and believed politicians had washed their hands of them.

A lack of "open and honest discussion" about the impact of immigration among politicians locally and nationally had created fertile ground for rumours spread by far-right groups about preferential treatment being given to ethnic minorities.

Blears warned that white people's concerns about the effects of immigration should not simply be branded "racist", as this would simply alienate them even more.

Citing a "growing sense of unfairness and disempowerment among poor white people", the Communities and Local Government report found that hostility to immigrants was worst in the most deprived estates, as "people who have the least are more likely to be afraid of things being taken away from them".

Few of those questioned had frequent contact with people from ethnic minorities and few of them understood the idea of integration, the report said. Respondents found it difficult to speak openly about their concerns for fear of being branded racist or offending others.

Blears said: "People who care about their communities and have lived there for generations have every right to ask questions about what is happening in their estate, street, neighbourhood.

"We cannot allow people to exploit situations but where there are legitimate concerns or questions they should be able to express them without fear of being branded a racist when all they really want are answers or information.

"The job of politicians and leaders is to listen and respond, to have the very debates that people in these estates are having or we risk losing touch with them altogether.

"What the report shows is that there are real complexities around the perceptions held by the white working class and government is keen to look more closely at what can be done to ensure that grievances and misunderstandings are addressed."

A seminar is to be hosted by DCLG ministers in the coming weeks, bringing together government departments, councils and academics to look at how to "bridge the gap" between the authorities and the white working-class communities they serve.

In the past Blears has faced criticism for some of her remarks on immigration but the minister accused her political opponents of taking her comments out of context.

Speaking later on the BBC's World at One programme, Blears admitted that the national housing shortage was at the heart of the problem.

"People do want to see more housing in this country," she said. "That is a key problem that is causing a lot of the underlying tension with people.

"When people have very little they feel insecure then you get myths and rumours peddled by those on the far right and that is what we are trying to prevent."

Blears repeatedly dodged suggestions that councils should be instructed to give priority housing to local people but said plans to build more than 1 million new homes should ease the problem.

Labour MP Frank Field, co-chairman of the cross-party group on balanced migration, called on the government to address white working-class worries about immigration.

He said: "Hazel Blears says that people on council estates feel ignored. That is exactly our point. And not only on council estates – 80% of the public want to see a substantial reduction in immigration, but the government refuses to address the issue.

"No wonder people feel the government is riding roughshod over their wishes, and not only in the poorest areas, which are bearing the brunt of the present massive level of immigration. Unless further action is taken soon, immigration will add nearly 10 million to the population of England in the next 20 years.

"If Labour wants to influence the outcome of the next general election, it had better start addressing white working-class concern about immigration, not simply reporting on it."

Responding to Blears's statement, Lady Warsi, the Tories' spokeswoman on community cohesion, said: "What an indictment of New Labour that they have to have an investigation to show that over the last 10 years they have completely lost touch with their so-called roots.

"The danger for the rest of us is that this has now created a ticking time bomb of racial and class prejudice.

"Amongst other things this has also demonstrated the dangers of Labour's past use of identity politics for electoral purposes. I do hope they take the right lessons from this and not use it as an excuse to go down the line of a new 'white relations industry' now to be built on yet another 'special needs identity' .

"This should be a call to focus on the real core problems of worklessness, debt, welfare dependency, family breakdown and drug and alcohol abuse."

The annual quota for unskilled Romanians and Bulgarians coming to work in Britain is to be raised by 5,000 to 21,250 from next April, in response to evidence that labour shortages have left fruit and vegetables rotting in the ground.

The Home Office confirmed yesterday that the restrictions on Romanians and Bulgarians gaining access to more skilled British jobs are to remain in place for a further 12 months. The decision to maintain the curb on the two most recent members of the EU follows a report from the government's migration advisory committee which estimates that 20,000 Romanians and Bulgarians have arrived to work in Britain in the last two years.

The 5,000 increase in the quota for those coming under the seasonal agricultural workers' scheme [Saws] follows complaints by the National Farmers' Union that two-thirds of growers did not have enough labour to harvest all their fruit and vegetable crops. They claim £13m worth of food went unpicked this year.

The committee's report says that in the short term there is no sensible alternative to more immigration to deal with this problem. "Crucially, it also reflects the fact that workers coming to the UK on a seasonal basis do not gain permanent unrestricted access to the UK labour market," it says.

The labour market economists who make up the committee say that in the longer term they expect the horticulture industry to deal with labour shortages by raising wages, improving working conditions or switching to less labour-intensive methods. They say the decision to keep the restrictions for more skilled jobs in place for a further year is not because they fear a large inflow of migrants from Romania and Bulgaria. The impact of lifting the restrictions would be small, they say, but a cautious approach is needed given the economic downturn.

The immigration minister, Phil Woolas, said the government had decided to leave the restrictions in place because it was essential that only those who were needed came here to work. "This is a prudent decision that will ensure the UK continues to benefit from the positive economic contribution Bulgarian and Romanian workers make, while protecting British workers," he said. But the TUC general secretary Brendan Barber said the decision was inconsistent with ministers' comments on resisting protectionism. "Banning Bulgarian and Romanian workers while allowing the self-employed in will lead to more bogus self-employment," he said. "The government should concentrate on providing equal rights for all at work to prevent exploitation and undercutting, and meeting skill shortages through greater efforts on training."

Are immigrants taking our jobs? It is an explosive issue, especially with Britain sinking into recession and unemployment rising. So opponents of immigration will doubtless seize on a new report by the independent thinktank MigrationWatch UK, which claims that those dastardly foreigners who have the cheek to look after your granny or pick English strawberries are stealing jobs from British people. Yet the claims of Sir Andrew Green's thinktank are flatly contradicted by figures from the Office for National Statistics (ONS).

MigrationWatch claims that nearly all the jobs created in the UK since 2001 have gone to immigrants. But figures from the labour force survey (xls), show that employment among British-born people actually rose by 378,000 between the second quarter of 2001 and the second quarter of 2008, the dates arbitrarily chosen by MigrationWatch. If one excludes the recent fall in employment due to the financial crisis and instead compares the last three months of 2000 with the last three months of 2007, the number of UK-born people with jobs has risen by just over half a million (520,000).

MigrationWatch also claims that employment among UK-born people has fallen by 230,000 since the second quarter of 2004, when Britain opened its labour market to the Poles and other eastern Europeans joining the EU. But this too is contradicted by ONS figures. These show that the number of British-born people in jobs actually rose by 43,000 between the second quarter of 2004 and the same period of 2008. Excluding the impact of the financial crisis, employment rose by 175,000 between the second quarter of 2004 and the last three months of 2007.

MigrationWatch says that "there has been no progress at all in getting British-born unemployed workers into work" since 2001, and blames immigrants for this. But ONS figures suggest otherwise. They show that the employment rate among British-born people – the proportion of UK-born people of working age in employment – rose sharply in Labour's first term, from 73.5% in the second quarter of 1997 to 76% in the third quarter of 2000. Since then it has remained roughly steady: it was 75.6% in the second quarter of 2004 when Britain opened up to east European workers and 76% in the last quarter of 2007. In other words, the employment rate stopped improving well before eastern European migrants started arriving in large numbers, and has not worsened since.

The bigger point is this. As even MigrationWatch is forced to concede, there is not a fixed number of jobs in the economy. Immigrants don't just take jobs, they also create them, as they spend their wages and fill roles in complementary lines of work. If Britain threw out its Polish workers there wouldn't suddenly be more jobs for British people – just as throwing women out of work wouldn't provide more jobs for men.

Whichever way you look at it, immigrants are not taking British people's jobs. On the contrary, they are helping to provide vital public services and keep small businesses going. Not for the first time, MigrationWatch's xenophobic prejudice is causing it to twist the truth. Andrew Green should be ashamed of himself.

A Kurdish asylum seeker who sewed up his mouth in an attempt to avoid being returned to Iraq last week had the stitches forcibly removed and was still put on the plane the next day, it emerged yesterday.

He was among 49 rejected asylum seekers who were put on a special charter flight to northern Iraq last Wednesday, which took off six hours late from Stansted and was forced to return to Britain after being refused permission to land in Iraq.

The flight's take-off was delayed because two asylum seekers had to be removed from the cabin. One had smuggled a blade on board and slashed his stomach, while a second concussed himself by banging his head against the window.

A witness on the plane said many of the 76 Group 4 Securicor guards who accompanied the deportees were shocked by what happened. Some deportees were in handcuffs and others in leg irons.

They had been taken to Stansted airport from Dover and Colnbrook immigration detention centres in preparation for the midday flight in an old French charter plane. After leaving six hours late, it stopped at Bucharest for refuelling before going on to Irbil in northern Iraq. It arrived at 3am in clear and calm conditions, but made several passes before returning to Turkey because of "bad weather". The plane and its passengers arrived back at Stansted 31 hours after leaving the UK.

Hassan Muhammad Kochar, one of the deportees, said: "We were taken to Irbil, the plane was circling in the air. After three circles the plane turned round and landed in Turkey. We waited there for an hour and a half. The guards said they'd take us to Kurdistan, but they didn't. Then we went to Romania. They told us they'd send us back, but they didn't. They said it was because of the weather, but that doesn't make sense."

Michael Woolley, of the Visitors Group at Haslar immigration detention centre, Portsmouth, said one reason for the protests was the widely held belief that three men who had recently been returned to northern Iraq had all died. He also said that one deportee had been in England since 1999 and had an English partner and three children.

A UK Border Agency spokesman refused to comment on the flight but said that returns to northern Iraq were enforced when officials were satisfied that it was safe to do so.

The fresh details about the attempt to fly the Kurds home came as the former Tory leader Iain Duncan Smith said rejected asylum seekers who were unable to return home should be allowed to work and have access to healthcare.

"The policy of making asylum seekers destitute is mean and nasty and has not worked," said Duncan Smith in a report by the Centre for Social Justice. The report estimates that at least 26,000 failed asylum seekers in the UK are surviving on Red Cross food parcels.

In more than 25 years living on deprived housing estates in Bath and then Glasgow, Bob Holman never once met an asylum seeker. Yet this week, the Christian socialist and long-time Labour party member is one of the authors of a report on asylum seekers for former Tory leader Iain Duncan Smith's thinktank, the Centre for Social Justice. Holman may be 72 and retired from the frontline of neighbourhood work. He may have moved from Easterhouse to a more sedate estate in another part of Glasgow to spend more time with his wife, Annette, and their grandchildren. But he was never going to break the habit of a lifetime by backing away from injustice when he sees it.

This is a man, after all, who famously gave up a comfortable life as a university professor to follow his religious convictions to live and work among the poor. Today he's briefly back in academia to receive an honorary degree from ­Birmingham University, where he taught in the late 1960s. Annette has popped out to buy him a decent shirt for the ceremony while he luxuriates in the unaccustomed surroundings of a conference park in leafy Edgbaston.

"We now live in a solidly built 1920s former council house," he explains. "But nearby are some rather grim-looking tower blocks, one of which houses ­asylum seekers. I'd got to know some of them and listened to their stories."

Brutal treatment

Their stories appalled him — not only the brutal treatment they had received in their own countries for having the wrong political affiliations, race or religion, but also by the lack of sympathy for their plight from a governing British Labour party, of which he has been a member for 47 years. "I've witnessed one of those dawn raids," he adds, shaking his head at the memory of immigration ­officials "dressed up like soldiers".

So what did the lifelong socialist do about it? He contacted a friend who just happened to be a former leader of the Conservative party. Iain Duncan Smith has made no secret of his admiration for Holman, who was running Family Action in Rogerfield and Easterhouse (Fare) when Duncan Smith came to visit through his Centre for Social Justice. "He was shocked by the poverty, and particularly so when he saw discarded syringes in the gutter," Holman recalls. "But he was impressed to see unemployed people and single mothers helping to run our project. He promised to come back again, and he did. Not for publicity purposes either. He's a man of integrity, and we get on well."

The two men make for strange bedfellows and, not surprisingly, don't always see eye to eye on ways to tackle poverty and social exclusion. Far from it. Holman, for instance, remains fundamentally opposed to the conclusions and recommendations of a recent Centre for Social Justice report on housing poverty. "The committee who produced it are well intentioned," he concedes. "But it seems to me that they doubt the value of social housing when they talk about the 'stifling requirement' that tenants have security for life. I don't see why those ­tenants should have hanging over their heads the possibility that they could be moved out of properties where they've lived all their lives. And the report also appears to pin the blame for crime, antisocial behaviour and lack of aspiration on to what we used to call council estates. Stimulating private ownership is put forward as the main solution."

Holman regards the encouragement of private ownership by the Thatcher government as the prime reason why those estates became "ghettoised" in the first place. "The result was that families did buy, then sold, then left," he says. "No wonder some of the stability was undermined. At the same time, there was an enormous cutback in traditional manual jobs, while local authorities were debarred from reinvesting the receipts from council house sales in building more social housing."

The fundamental difference between him and the members of Duncan Smith's committee on housing poverty, he maintains, is this: "They regard social housing as a failure, while I see it as a success. If you go back to the 1920s, council estates were introduced because of the failure of the private market. I should know. I was born in private rented accommodation." In 1936, in Ilford, east London, to be precise.

Did being married to a Glaswegian help when he arrived in "Easterhoose" after living in a rundown part of Bath for 10 years? Not much. "We don't much like Englishmen up here," he was told by one resident, who added: "Mind you, it could be worse. You could have come from Edinburgh."

Hairy encounters

Holman grins at the memory. Despite some hairy encounters, he has long since felt accepted in his adopted city. But he has never lost his sympathy for outsiders and outcasts. Hence his relief when Duncan Smith commissioned the report on asylum. This time, Christian socialist and Tory appear to be at one. "Members of the Centre for Social Justice have shown how sympathetic they are to asylum seekers," Holman says, approvingly. "That's not necessarily true of all Conservatives. But it's a marked contrast with the attitude of New Labour ministers."

It remains to be seen how many — if any — of the report's recommendations will be taken on board by the Conservative party. For a start, the committee proposes that the initial "substantive interview" should be carried out not by civil servants from the immigration service but by three magistrates, independent of government and properly informed about the state of countries from which asylum seekers are fleeing.

"That's based on a model from ­Canada," Holman explains. "As it is, only 3% are granted asylum here outright. Of those refused, 30% have their appeals upheld, which shows there must be something wrong with the system. There are often complaints about poor quality interpretation, and women feel that they are not confident to tell their interrogators about cases of rape and sexual abuse."

So the second recommendation is that all asylum seekers should be entitled to proper legal representation.

The third is that those waiting for appeals to be heard should be allowed to work. "Many of them are very capable professional people," Holman points out. "Yet they're crammed into very poor accommodation, offered 70% of income support, and told that they're not allowed to contribute to our society. Or, in the case of so-called Section Four cases — those who've been rejected for asylum and also refused readmission by the countries they've come from — they're given £35 a week in food vouchers."

Another recommendation is that those refused asylum should be given a volun­tary sector worker to befriend them, advise on their appeal and, if that fails, help to ease their return journey.

Holman has witnessed some harrowing cases in the course of researching his part in the report, such as a Turkish Kurd threatening to throw himself off a balcony on the 24th floor, and two destitute Zimbabweans telling him that sleeping rough in a Glasgow square is better than going home to be tortured. But he has also seen joy on the faces of fellow users of a drop-in centre at his Baptist church. "These are educated people who had seen relatives shot in front of them," he says. "And, after five years, they were finally granted asylum. When they came in waving the sheet of paper, we clapped, cheered and wept. After all, they're part of us."

• This interview appears in Wednesday's SocietyGuardian

Asylum seekers refused permission to live in the UK but who are unable to return to their country of origin should be allowed to work and access health care, a report by former Conservative leader Iain Duncan Smith's thinktank said today.

The Centre for Social Justice (CSJ) report, co-authored by Christian socialist and long-time Labour party member Bob Holman, proposes setting up a new independent body to rule on asylum claims. The body will be made up of a panel of magistrates, with charities and voluntary groups contracted to provide support for immigrants until they are returned home or integrated into society if allowed to remain in the UK.

Unsuccessful applicants should continue to receive housing and financial support for up to six months pending their removal says the report.

Duncan Smith said the government's "nasty" policy of refusing to support failed asylum seekers in an effort to force them to return home has failed.

"The policy of making asylum seekers destitute is mean and nasty and has not worked," he said.

The thinktank found at least 26,000 failed asylum seekers in the UK are surviving on Red Cross food parcels.

There is a backlog of 280,000 failed applications which could take 20 years to clear, the CSJ warned. Of those refused asylum, 30% have their appeal upheld which suggests there must be something wrong with the current system, said Holman.

The report, Asylum Matters, said the existing system forces many refused applicants to face destitution or disappear off the authorities' radar and drift into illegal employment, prostitution or crime.

It said: "Making refused asylum seekers homeless and penniless is hugely counterproductive. It is much more difficult to work with them to encourage voluntary return or to ensure timely removal."

The UK lags far behind countries such as Sweden or Canada in persuading failed asylum seekers to leave voluntarily, the report found. A forced removal costs around £11,000, 10 times as much as a voluntary return.

In a preface to the report, Duncan Smith said: "The evidence gathered for this report shows that the welcome offered today falls far short of our traditional standards.

"It also appears that a British government is using forced destitution as a means of encouraging people to leave voluntarily. It is a failed policy.

"UK policy is still driven by the thesis, clearly falsified, that we can encourage people to leave by being nasty.

"The result is that we rely heavily on forcible return, which is both very costly and time-consuming, and engages only a small proportion of those whose claims are refused.

"This system gives refused asylum seekers good reason to abscond and little reason to engage with officialdom."

The report recommends speeding up the asylum system so that those rejected are returned home within six months, either forcibly or voluntarily, compared with the existing process which takes an average of 13 months.

Holman, whose community work on the Easterhouse estate in Glasgow is greatly admired by Duncan Smith, approached the former Tory leader to conduct a review of British asylum policy after he witnessed a dawn raid by immigration officials on asylum seekers in Scotland.

He told The Guardian: "Members of the Centre for Social Justice have shown how sympathetic they are to asylum seekers. It's a marked contrast with the attitude of New Labour ministers."

The Home Office said it did not believe that the taxpayer should continue to support failed asylum seekers when it had been deemed safe for them to return home.

"Asylum seekers who need support to avoid destitution are given it from the time they arrive in the UK until their claim is fully determined," a spokesman said.

"When an asylum seeker has been found not to need protection it is our policy to discontinue providing support.

"We do not consider that it is right to ask the UK taxpayer to continue to fund those who choose to remain here when they have no grounds to stay and it is open to them to return to a home country that has been found safe for them to live in."

Donna Covey, the chief executive of the Refugee Council welcomed the report and said it "makes an important contribution to the asylum debate".

"It rightly points out that the fundamental problem with the system as it stands is that decision-making is poor, and not enough resources are put into getting them right first time," she added.

"We have been calling for the kind of radical overhaul outlined in the report for many years. It is time now to end this inhumane, appalling practice of forcing asylum seekers into destitution, and regain public confidence in the asylum process by having a system everyone can trust and that works.

"In the meantime, at the very least those asylum seekers who have been left in limbo for so long should be allowed to work and support themselves until their claim is dealt with properly and they are given status or can return home."

A landmark legal ruling has paved the way for thousands of asylum seekers in the UK to be allowed to work. The High Court has ruled that current laws preventing an Eritrean asylum seeker from taking a job are incompatible with the European Convention on Human Rights.

Last night legal experts said the test case would have major ramifications for others seeking asylum.

The Eritrean man, called Tekle, who cannot be returned to his home country because it is considered too dangerous, has been in the UK for seven years while his case is considered. Thousands of asylum seekers from other countries also considered too dangerous to return to - including Iran, Iraq, Somalia and Zimbabwe - are in a similar position.

The ruling has no bearing on the 300,000-plus asylum seekers whose applications are being fast-tracked because they do not come from countries considered no-go areas. But Caroline Slocock, chief executive of the Refugee Legal Centre, said the ruling would affect a significant category who found themselves destitute and in limbo. 'We expect it to be in the thousands,' she said.

Mr Justice Blake ruled that a blanket ban was 'unlawfully over-broad and unjustifiably detrimental to claimants who have had to wait as long as this claimant has'. He said the Home Office's policy breached article 8 of the convention, which guarantees the 'right to respect for private and family life'.

The ruling comes as the former Tory leader, Iain Duncan Smith, prepares to publish a report tomorrow suggesting that failed asylum seekers shoul