A vacuum at the heart of the government’s counter-extremism policy is leading British Muslims to despair in the face of spiralling Islamophobia, a former Labour Cabinet and Home Office minister has warned.

Liam Byrne says that thousands of Islamic State foreign fighters are expected to return to Europe, including Britain, after the fall of Mosul and use Donald Trump’s inflammatory rhetoric to find fresh recruits in a new book.

In his book, Black Flag Down: Counter-extremism, defeating Isis and winning the battle of ideas, Byrne says that any new strategy must reflect current security services’ thinking – which, he says, means rejecting David Cameron’s claims that there is a simple “conveyor belt” that links religious faith to extremism.

The MP for Birmingham Hodge Hill, representing the largest Muslim constituency in Britain, also warns against rhetoric that wrongly claims there is an “epic clash of civilisations” underway between Islam and “the west”.

“In the vacuum, while Islamophobia spirals, British Muslims despair … Many British Muslims feel surrounded by ‘supremacists’. National supremacists who declare you can’t be British and Muslim. And religious supremacists who say you can’t be Muslim and British. One lot deny Muslims their country. The other crowd deny Muslims their faith,” he says in a Guardian article.

He says that Theresa May’s and Cameron’s mistaken “conveyor belt” theory has inspired ministers to draw up such a broad definition of “extremism” that even the archbishop of Canterbury believes would make him a criminal.

A possible proposal to ban groups including the Muslim Brotherhood and Hizb ut-Tahrir as extremist, reflects a lack of confidence in British values, he says.

The former minister says that after a year of research in Birmingham, Iraq and Palestine, and talking to counter-terror police and intelligence experts, he is convinced a new understanding of radicalisation is needed based on the fact that it is grievance rather than god that inspires too many to turn to violence.

He cites a 2008 MI5 study, which concluded that there was “no single pathway to extremism”, as the basis for rejecting the conveyor belt theory that leads to the banning of non-violent extremists groups and individuals.

Byrne says current thinking by intelligence experts describes the process as closer to “snakes and ladders” with the “ladders” taking young people closer to violence while the “snakes” (certain other life experiences) can suddenly move them away from a violent path. The problem is that while the snakes are well understood, the ladders remain more of a mystery.

He suggests other elements in a new counter-extremism strategy, such as a British bill of rights that covers free speech and compassion; universal “character education” in schools and a history curriculum that recognises the contribution of other nations to the British war effort; and a bank holiday for St George’s Day.

Bryne believes positive action is also needed to encourage a more diverse leadership in Britain’s public services and reveals that in Birmingham a third of public spending bodies have no leaders from minority ethnic groups among their top 10 leaders.

Freedom of Information requests by Byrne revealed that in Birmingham – Britain’s most diverse city whose population is 52% white British – nearly 80% of 561 identified leaders of organisations that spend public money are white British.

Two universities, hospitals and the fire service have no minority ethnic people in their top 10 leadership positions. “We have work to do to ensure the power structure of the city reflects the community that calls it home,” says Byrne.