Urgent and comprehensive changes to the way the UK food system is policed are needed to protect UK consumers from serious organised crime, according to the delayed independent inquiry (pdf) in to the horsemeat scandal, which is finally published on Thursday.

It calls for a food crime unit with full police powers and expertise to be set up as a priority.

Because there is currently little investigation or prosecution of food crime there is a "huge incentive for the criminal to pursue food crime … [which] risks system-wide proliferation if left unchecked", the inquiry report says.

The review of the integrity of the UK food network was commissioned by the government in February 2013 in the wake of the horsemeat scandal and was originally promised for spring of this year. But intense Whitehall negotiation over some of its hard-hitting findings has contributed to delays in publication.

Among its more contentious findings is a warning that the aggressive buying practices of some of the big supermarkets have got even worse since then and that their current price wars are exposing the UK to further food crime.

The report says where retailers buy foods from suppliers at prices well below the recognised market price, it can be inferred that the most obvious way for the supplier to meet that price is by fraud. It calls for retailers to prove they have checked properly for adulteration or misrepresentation or the goods could amount to "criminal property".

The report highlights several failings in the government's response to what was the largest food fraud of recent times. It expresses concern that there is still no effective contingency plan in place to deal with the next "inevitable" scandal. With the Food Standards Agency (FSA) not planning to launch one until spring 2015 it warns that it may be caught out again.

Chaired by a food safety academic from Belfast's Queen's University, Prof Chris Elliott, the review contains a devastating catalogue of the inadequacies of the current system for ensuring the food chain is honest.

It says:

• The public laboratory service, which tests that foods are safe and what they claim to be, faces an existential crisis because of deep cuts in local authority budgets. Urgent restructuring will be needed to save it. Testing food cannot be left to the private sector which has different priorities, it concludes.

• Local authority enforcement services have been "cut to the bone". Trading Standards departments will have suffered an average 40% cut in England and Wales over the lifetime of this parliament. Any further cuts here would leave local authorities "unable to effectively protect consumers" from fraudsters.

• The original investigation in to the horsemeat crime was conducted by regulators "at least in part with insufficient experience or expertise in the investigation of serious food crime and none at all in tackling complex organised crime".

• None of the bodies which might be expected to investigate serious organised crime in the food sector – from the Metropolitan police and other police forces to the Serious Fraud Office, and the National Crime Agency — see it as their role at present.

• There is currently an "impasse" in which intelligence on food crime is not collected because it is not a police priority and police do not investigate food crime because they have no intelligence about it. A mechanism for intelligence gathering is needed urgently, it says.

The review was unable to estimate the extent of food crime in the UK because data is not collected – it is not even a searchable category in recording crime.

But Elliott concludes that evidence from other European countries shows there is a substantial problem with organised crime in the food sector and the UK is not immune.

Several other EU countries already have food crime units. The Dutch, whose model he recommends the UK follow, conducted 24 major investigations into food crime in 2012 and seized €6.5m (£5.2m) in criminal assets as a result. When the Dutch unit tried to work with the UK authorities over horsemeat however, the report says they could find no one to talk to.

• Supermarket and industry audits manage to be both enormously burdensome and futile in detecting fraud. Audits should be unannounced inspections, whereas the majority are currently pre-announced. They need to be radically changed to include forensic auditing.

The recommendations call for changes across government departments and industry, and Elliott warns that they will only work to protect consumers from food crime if taken as a whole and not cherry-picked.

The FSA is told it needs to improve its "political awareness and operational agility".

The government meanwhile needs to "reaffirm its commitment to an independent FSA" free of political interference.

One of the most contentious issues in the horsemeat scandal has been whether the coalition government's decision to strip the FSA of responsibility for food authenticity contributed to the crisis.

The final report ducks apportioning blame and finds that the FSA's programme to check the authenticity of food was already being wound down before the election. But it notes that greater clarity is needed about where the boundaries lie between the Department for the Environment, the Department of Health and the FSA "to ensure there is no repeat of the confusion which occurred at the beginning of the horsemeat incident".

There is still no proper coordination across Whitehall – with no regular high level meetings between the chair of the FSA and the health and environment secretaries, the report says – and a new national food safety and food crime committee which could report to the crisis Cobra committee in the event of another scandal is needed.

Sources have told the Guardian that Elliott came under sustained pressure to water down some of his findings but has stood by the substance of interim findings published at the end of last year.

Looking specifically at the red meat industry, the review found that there was a high risk of fraud and low risk of detection in cold stores, during transport, and when frozen blocks of meat are used in production to which offal such as heart of lungs or cheaper species can be added to look like higher-quality lean meat. The review received information that meat suitable only for pet food being reclassified as fit for human consumption is another high risk area.

The government welcomed the final report (pdf) and agreed to adopt its main recommendations. It said it would set up a food crime unit within the FSA and improve coordination across government on food crime. It also agreed to review public laboratory capacity and support industry in improving its auditing systems.

The environment secretary, Elizabeth Truss, said the government was acting to give more power to consumers, with better labelling, better education about where food comes from and better food in schools and hospitals:

"We're taking action to make sure that families can have absolute confidence in the food they buy. When a shopper picks something up from a supermarket shelf it should be exactly what it says on the label, and we'll crack down on food fraudsters trying to con British consumers.

"As well as keeping up confidence here, we need to protect the great reputation of our food abroad. We've been opening up even more export markets, which will grow our economy, provide jobs, and support the government's long-term economic plan."

Labour said the lack of government leadership had put the UK's largest single manufacturing industry, and the million of jobs that depended on consumer confidence in it, at risk by delaying acting.

Maria Eagle MP, the shadow environment secretary, said: "Consumers were rightly outraged by the horsemeat scandal, yet the government has dragged its heels and made absolutely no progress in the 18 months since it happened.

"David Cameron approved changes to the structures of government that weakened consumer protection, culminating in the horsemeat scandal. The confusion this caused is highlighted in today's report yet the government have totally failed to admit they got this wrong and have still not reversed the misguided decision to fragment the Food Standards Agency. The government must now show leadership and establish an effective food crime unit as soon as possible."​