That is not what the document says, though. It says this (source--https://www.gov.uk/government/publications/the-report-of-the-commission-on-race-and-ethnic-disparities/foreword-introduction-and-full-recommendations):

The Commission was especially concerned with the way the term ‘institutional racism’ is being applied in current discourse on racial disparities.

The late Sir William Macpherson gave the following definition, which we believe has stood the test of time: "The collective failure of an organisation to provide an appropriate and professional service to people because of their colour, culture, or ethnic origin. It can be seen or detected in processes, attitudes and behaviour which amount to discrimination through unwitting prejudice, ignorance, thoughtlessness and racist stereotyping which disadvantage minority ethnic people."

The term is now being liberally used, and often to describe any circumstances in which differences in outcomes between racial and ethnic groups exist in an institution

The Commission therefore feels that misapplying the term racism has diluted its credibility, and thus undermined the seriousness of racism, where it does exist

Their point isn't that it doesn't happen (c.f. where it does exist), but that it is important to identify that the cause is prejudice, ignorance, and/or thoughtlessness. As opposed to, say, different age demographics between two groups.

They simultaneously object to what they view as divisive language: However, we also have to ask whether a narrative that claims nothing has changed for the better, and that the dominant feature of our society is institutional racism and White privilege, will achieve anything beyond alienating the decent centre ground – a centre ground which is occupied by people of all races and ethnicities.

While expressing a willingness to do the work of solving underlying systemic problems: We recognise the lived realities, and sometimes trauma, of racial disadvantage. Our thinking also looks hard at the evidence and the multiple causes in play, and seeks to come up with relevant measures, for example, to deal with the disproportionate effect of our Class B drug laws on young Black people or problems in mental health provision for those ethnic minority groups that struggle to access services when they need them.

So I really don't understand why you decry the report itself as seeming to "throw oil onto an already sizzling fire". They are trying to put the fire out, according to their statements. I can understand disapproving of how some politicians have tried to sell it. But the document itself seems quite well aligned with most of your thoughts, except it does not think the language you seem to favor helps with getting on with the work that needs to be done.

Given the massive outcry over such language in the United States especially, I think the burden lies on those who advocate that the framing and phrasing is correct (not the meaning, but the terms used) to demonstrate their case.

The document is not disruptive, revolutionary, or anything of the sort. But neither is it timid nor does it deny that there are often unacceptable outcomes. Indeed, it repeatedly calls for problems to be addressed even while it hesitates to assign malice to the source of the problem: Outcomes such as these do not come about by design, and are certainly not deliberately targeted. But, when they do occur, every step needs to be taken to ensure that the reasons why they happened are understood fully, and the causes then acted on to ensure that they are not repeated.

You might disagree with its approach, and it's perfectly fair to argue against it on the merits, but you should fairly represent its content and whether it is written to be inflammatory or calming.