It's time to make some serious money from immigration. Britain could and should raise billions every year from the world's rich and skilled who want to live and work here. We should auction residential visas to the world's super-rich. We should top that up with swingeing fines on employers of illegal migrant workers. (We currently don't bother to collect what are only modest fines.) We could even auction some work permits.

We should spend the proceeds on a programme of house building, job creation and training for the young – focused on unemployment black spots. The message would be that immigration is beneficial and, by showing how, take some of the sting from the tidal wave of scapegoating and quasi-xenophobia that masquerades as honest-to-God Euroscepticism or freedom to speak the allegedly unspeakable. Far from not talking about immigration, we now talk about little else.

Along the way, let's expose Nigel Farage, the capo of the anti-immigration brigade, for being a charlatan. He may not read his own manifesto, but on his next train from Charing Cross, instead of being distracted by fellow passengers who have the temerity not to speak English, he might try to read the analysis of Migration Watch.

The thinktank is hardly part of the liberal elite against whom the fulminating Farage rages. Rather, it is the very non-liberal campaigner against excessive immigration and custodian of freezing Britain at somewhere around 1980. But Migration Watch does not argue for leaving the EU to solve the problem. Instead, it points out – surprisingly calmly – that net immigration into Britain from the 15 original member states runs at a blameless 30,000 a year.

The recent EU influx has been driven by the new accession states from eastern Europe, although Migration Watch observes that even that is beginning to fall back to much lower levels. However, this will be offset over the next five years by a buildup of an expected 50,000 a year from Bulgaria and Romania – the main cause of last week's spike. But if they conform to the same pattern of going home, by the end of the decade net migration from the EU will be at manageable levels

The issue is the 300,000 or so non-EU migrants who come to Britain every year, with only 100,000 leaving. In the main, EU nationals go home after a spell working here. (And let's remember 100,000 Britons emigrate from Britain to the EU every year.) It is non-EU nationals who stick around and many of those benefit our economy and society – although it is hard to point to unambiguous ways.

One imaginative ploy was floated last week by the Migration Advisory Committee. First, Britain should double the £1m we ask aspiring residents to invest in government securities as a condition of fast-tracked residency, and widen what they should invest in beyond simple government bonds. We should also create a category of around 100 "premium visas" that we should auction in sealed bids each year to the global super-rich – mainly Chinese, Russian and Middle Eastern oligarchs – who want to come and settle here.

The committee suggests a reserve price of £2.5m, of which £2m would be allocated to investment assets, and a minimum £500,000 should be donated to the government in a good causes fund. This could be disbursed to support anything from training to medical research. (Of course, these financial demands do not, and should not, apply to more regular applicants who must comply with strict requirements relating to work and pay, or the support of a family member.)

There were predictable protests from the solicitors and accountants acting for rich migrants who feared that an important business line would be threatened. I am with Sir David Metcalf, chair of the committee, who robustly dismissed all the carping, arguing that auctioning the visas was not demeaning, and infinitely better than doing what we do at present – in effect, giving them away. It is almost impossible to see what benefits Britain draws from these arrivals, who are only asked to buy gilts that we have no difficulty selling – a requirement unchanged since it was introduced in 1994. They might hire the odd chauffeur or buy a Dior suit, but the main consequence has been sky-high central London property prices. There was no evidence they are philanthropists; if anything, they make Scrooge look generous. Let's at least create a system that benefits the country.

The Metcalf proposals are intriguing. If the committee's recommendations are accepted it would create an instant minimum supply of at least £1bn for investment in any security or asset class we chose to select as eligible – infrastructure "visa" bonds, "visa" bonds for small and medium businesses, or the Enterprise Investment Scheme.

The good causes fund would be a minimum of £50m. But why not go further? Why not aim to create an annual good causes fund of £500m, partly from auctioning residential visas but adding the proceeds from auctions for visas for "entrepreneurs" and from work permits? It could be topped up with fines on employers of illegal immigrants. Suddenly, there would be the resources to reintroduce, say, the superb Future Jobs Fund to offer young people decent work experience which, with some combination of reduced national insurance contributions and ambitious public works programme financed by "visa" bonds, could see a real dent in youth unemployment numbers.

Any of this would have been possible at any time in the last decade. It is our failure to think straight, make good policy and implement it, caused in part by the political class's instinctive genuflection to the rich at home and abroad. Nor is membership of the EU the cause of our immigration ills, it is globalisation and the population flows it generates.

Into this vacuum has stepped an enterprising, saloon-bar zealot – Mr Farage, who says he is not anti-immigration or anti-openness. But he has singlehandedly done more to stir anti-immigrant, anti-openness sentiment than any recent politician. Let's just blame the EU, in particular, and immigrants, in general, for our self-made problems. As a result, the right of British politics is less secure on questions of race, openness, and tolerance than it has been since 1945 – and it is pulling the entire political discourse with it. Long-standing British virtues are under siege and at risk.

Practical responses are urgently needed, otherwise exit from the EU and de facto closure of our borders are real possibilities – an economic, cultural and moral disaster. Making serious money from immigration won't reverse this, but it might tilt the balance – and perhaps buy some time while EU inflows subside. It's worth a shot.