What have we done wrong?
I'd say that we have allowed (even encouraged) a large immigrant group to retain its distinct cultural identity, when elements of that culture are fundamentally incompatible with broader UK society's core beliefs and values.
That group has reinforced its traditional identity by maintaining a constant flow of new blood from the homeland, and by sending many of its young 'home' for religious training and indoctrination.
Because that group has neither assimilated nor even integrated, even second and third generation members of the group do not recognise a British identity.
We've exacerbated the problem by pursuing policies that are perceived as being gratuitously anti-Islamic, forcing members of our Islamic population to 'take sides'.