Young British Muslims are being let down by clerics who are under-educated and fail to preach in English, according to a leading religious figure who called for higher standards to be set down for those who can become imams.

Mirza Masroor Ahmad, spiritual leader or caliph to millions of Ahmadiyya Muslims around the world, said it was shameful that Britain had lost 500 or so young people to Islamic State (Isis) and attacked the group for paying money to teenagers to join their “barbaric” fight. He said Muslim leaders in the UK should be teaching “love of country” as well as love of god to disaffected young men and women and working harder to promote the peaceful message of Islam.

“The young people here have been raised in this country and they understand English, they should not be having to hear the messages of the Qur’an in Urdu or Punjabi, or just in Arabic alone. They should be well versed in their religious education as well as in their secular education in English,” said the caliph.

Ahmadiyya is a sect of Islam seen as heretical by some Muslims, and its believers are persecuted in many countries, particularly Pakistan. The sect, currently celebrates its 125th year, opened London’s first mosque in 1926. Its mosque in Morden, Surrey – western Europe’s largest mosque complex – this month hosted a peace symposium where the caliph’s keynote speech was attended by cabinet ministers Justine Greening and Ed Davey and by dozens of multifaith dignitaries from around the world.

The caliph spoke of Islamic anger against extremism and called for wider efforts for peace.

He told the Observer the British government should be forgiving to returning jihadis. “These are the frustrated people, educated people, they don’t get a proper job here and so the education is not giving them any return. They are frustrated. I myself feel their frustration. These people deserve a second chance. If they come back, of course we have to be vigilant and keep an eye on them.”

The caliph said that Britain’s small Ahmadiyya community had lost none of its young people to Isis, attributing this to the sect’s tradition of investing heavily in youth work that encouraged children to grow up understanding the peaceful teachings of Islam. He has called on other Muslims to help in drawing widespread attention to the verses of the Qur’an that promote peace, but he also attacked the reluctance of the international community to tackle Isis where it hurts: funding. Isis, he said, was not only well-equipped but could afford to offer thousands to the young fighters they recruit. “In other countries their families are given money – even here, if he goes he gets a lump sum of money.

“Isis is getting millions of dollars flowing to them, from Saudi, from Kuwait. All the intelligence agencies and the governments understand this. I talked to a head of a European government just the other day, and he said to me, ‘How do we stop this?’ ” I said, ‘You know already how we stop it – you stop the funding, you know where it is coming from.’ He just laughed and didn’t say anything. They know it, they understand it, but they have their party politics that will never allow them to do anything.

“We all should try to pressurise our governments. We have to take them to task. People want peace. It is not us who have lost hope. What will it take? Until they get nuclear weapons?” He said that was perfectly feasible when extremists have friends in power in nuclear states like Pakistan. But equally the caliph, who was exiled from Pakistan in 2003, said he had hope that extremism would be conquered. “What did the Taliban and al-Qaida gain? Their achievement was much higher 20 years ago than now. The same fate awaits Isis.”

He said it would take decades for Islam to recover from the damage to its reputation. “A lot of sensible people are trying to understand that Islam is not bad but it’s hard at the moment,” he said. “If Isis kill 10 people, it is widely aired. If we pledge 1,000 to peace, nobody cares.”