The Home Office is the wrong department to manage immigration after Brexit, says a highly critical report by the Institute for Government (IfG) thinktank.

The department is pressing ahead with the full rollout of a registration scheme for an estimated 3.8 million EU citizens from 30 March, but the report lays bare systemic flaws in the Home Office and calls for an “urgent” root-and-branch review of its immigration operations.

It says that ministers have relied on high-level political rhetoric about migration but have no clear policy. “Beyond that, the government has not put forward a detailed or coherent account of what it wants from immigration; instead, it has set blunt numerical targets that cannot be met,” the report says.

“The failure to make trade-offs, decide priorities and articulate objectives has damaged public confidence and made it impossible for government to run the system effectively,” it said, adding that the Home Office set up increases its ineffectiveness.

Sajid Javid, the home secretary, has already announced an independent review of immigration directorates in the wake of the Windrush scandal that cost his predecessor Amber Rudd her job.

Joe Owen, associate director at the IfG, said ministers “need to consider whether the Home Office is the right permanent home for a migration policy” that must serve the needs of the labour market, and be fair, efficient and inspire public confidence.

“Simply announcing a review is not a solution to the problems at the Home Office,” says the Managing Immigration After Brexit report.

It also pointed to other failings including:

• A disconnect between what politicians say and what the Home Office does.

• Unrealistic targets set by Theresa May.

• Policies based on politics rather than evidence, such as the widely criticised “hostile environment” introduced by May to scare immigrants into leaving voluntarily.

• Poor decision-making, meaning that over half of appeals against the Home Office are successful.

“Despite ministers’ involvement in some specific immigration cases, there is a big gap between what politicians and policy officials think happens in the system and what actually happens on the frontline more generally,” the report says. It adds that parliament is happy to ignore inconvenient truths, and is near silent on the fact the UK charges 20 times more to migrate to the country than Canada and is unconcerned that some immigration fees have increased by 500% in recent years.

“The issues set out in this report are urgent and must be addressed,” the report says, especially because of the fundamental change in immigration that will flow from the UK’s departure from the EU and its freedom of movement rules.

From Brexit day the Home Office, as it stands, will be the arbiter of all immigration, including the hundreds of thousands who seek work – seasonal and permanent, low-skilled and professional – from the EU.

Satbir Singh, chief executive of the Joint Council for the Welfare of Immigrants, said the public has become concerned about the human cost of the British immigration system.

“Families are separated, key sectors suffer skills shortages and futures are cancelled by a system that has come to be defined by poor decision-making, skyrocketing fees, and unrealistic targets,” he said.

The charity this week settled an out-of-court case with the Home Office after it addressed its concerns about vulnerable EU citizens in the UK.