Police, prosecutors and the courts in Britain are “filtering out” racial elements in hate crime cases, half of reported hate crime is not prosecuted and judges are underusing heavier sentences for hate crime, say Council of Europe anti-racism experts.

The European commission against racism and intolerance (Ecri) says racial aspects of hate crime cases are often being filtered out through a combination of an unwillingness to recognise racist motivation, reclassifying racist attacks as disputes or other forms of hostility, and an over-strict interpretation of the legal provisions on racist motivation.

The report of experts from 47 European countries, published on Tuesday, also says that about half the hate crime recorded by British police – including on social media – goes unpunished because no suspects are identified.

The fifth Council of Europe report on racism in the UK highlights concerns over the “considerable intolerant element” in the public political debate in Britain, particularly on immigration.

The experts say that hate speech continues to be a serious problem in tabloid newspapers, and online hate speech against Muslim people has soared since 2013. They say this is particularly evident in the targeting of Muslim women online on Facebook, Twitter and Instagram.

“It is no coincidence that racist violence is on the rise in the UK at the same time as we see worrying examples of intolerance and hate speech in newspapers, online and even among politicians,” said the Ecri chair, Christian Ahlund.

“The Brexit referendum seems to have led to a further rise in ‘anti-foreigner’ sentiment, making it even more important that the British authorities take the steps outlined in our report as a matter of priority.”

Police hate crime figures showed there was a sustained surge in reported hate crime incidents, with a first spike immediately after the 23 June referendum and a second spike at the end of July. Reported hate crime incidents continued to 15-20% higher than the previous 12 months until early September, when weekly figures were no longer released.

The Ecri report says Home Office figures show police recorded 52,528 hate-motivated criminal offences in 2014/15, including hate speech and violence covering religious, race and sexual orientation hate crimes.

But the Crown Prosecution Service said that 49% of all recorded offences went unprosecuted because no suspect had been identified and the case was closed. “This means a very large amount of hate crime goes unpunished,” says the report.

The anti-racism experts say that heavier “enhanced” sentences are one of the clearest indicators that the police, crown prosecutors and courts have all recognised the hate motivation in a case but say no data is available to show how often they are imposed. This has given rise to speculation that the provision in the 2003 Criminal Justice Act for enhanced sentences is underused.

The report also highlights concerns that the process of accepting guilty pleas sometimes leads to the “aggravating” race or religious crime element being dropped. The CPS told the commission that it is not policy to accept pleas to lesser offences or to minimise admissible evidence of racial or religious aggravation for the sake of expediency, but guilty pleas can benefit victims and witnesses who then do not have to attend court to give evidence and can substantially reduce costs.

“However, in light of the considerable evidence that hate crime is more traumatising to victims that other types of crime, the failure to acknowledge the hate motivation is emotionally damaging to victims as it does not recognise the specific harm suffered by them,” says the report.

The experts say that the CPS has already taken steps in response to community concerns to reinforce its policy to ensure that the racial aggravation element is not dropped in hate crime cases. But they recommend that data should be recorded when “enhanced sentences” are imposed, including on the criminal record of the offender. Steps also need to be taken to close the 50% gap between hate crime recorded by the police and cases referred for prosecution.

The report also praises progress in Britain, including the development by the government and police of a hate crime action plan and a new policy to improve opportunities for black and minority ethnic communities and substantial efforts to promote lesbian, gay, bisexual and transgender rights.