Alan Parker, the UK director who chairs British film support body the Film Council, has called for a radical overhaul of public support to finally cure British cinema of its "little England" disease.

In his most far reaching speech since taking up the council reigns, Parker said the UK's influential tax breaks should focus support on distribution instead of production.

Despite falling production levels and many in the British industry turning to low-budget films, saying that they cannot compete with US studios, Parker banged the drum for ambitious films that can travel internationally. He aims to open up incentives to overseas companies as well as UK companies working internationally. "We need distribution-led companies to carve out a British share of the $60 billion world market and we can't do this simply by staying at home," he said.

Although the tax breaks are one of the few supports for the beleaguered production sector, the director of The Life Of David Gale and Angela's Ashes slammed public funding for production as "taking us nowhere". He said that the National Lottery subsidies and the production tax breaks had not delivered structural change needed to break out of the bust-boom cycle.

"Direct subsidy solely to production will never, ever form the basis of a successful film industry - even if we double, triple or quadruple the money presently on offer," he said. "We need a tax break that gives incentives to distributors - both strong independents and American studios - to invest in and acquire British films." In an indictment of the lottery franchise system, he said that "producers will never be able to deliver the sustainable film industry we need" on their own.

"The evidence from too many years is clear that our producers are never going to build the companies which will form the basis of a successful film industry. It might work in television, but it hasn't worked in film. Producers are a form of talent; they take a fee for their services just like directors, cinematographers, production designers and everyone else."

Parker's comments come as many in the industry are retrenching to focus on low budget films for the local market. Channel 4 recently scaled back leading film financier FilmFour, pulling out of distribution and international sales after large-scale disappointments with Charlotte Gray and Death To Smoochy. Parker's deputy chair, Stewart Till, recently saw the disintegration of his own would-be global distribution empire, Signpost Films.

An undaunted Parker said the UK needed to ditch its parochial small-minded tendencies, "We need to abandon forever the "little England" vision of a UK industry comprised of small British film companies delivering parochial British films. That, I suspect, is what many people think of when they talk of a "sustainable" British film industry. Well, it's time for a reality check. That "British" film industry never existed, and in the brutal age of global capitalism, it never will.

"We have to stop defining success by how well British films perform in Milton Keynes. This is a big world - really successful British films like Notting Hill can make up to 85% of their revenues outside the U.K."

The director, who frequently works with US studios, aims to open up the breaks to international companies, as well as UK companies working internationally. ""We have to stop worrying about the nationality of money. We want to encourage investment into our film industry from anywhere in the world - without tearing up the roots of cultural film production."

The Film Council, which oversees lottery funds worth around£50m a year, will be the main lobbying force when the tax breaks expire in 2005. Parker, who lobbied to extend the breaks earlier this year, said the current system performed a valuable function but was still inefficient. "We have a Government that tells us it is willing to work in partnership with our industry. Willing to try to help us unlock the capital which gives us our best shot in years at creating a sustainable film industry."

Parker said his overall goal was to reinvent the UK as a "film hub", which he said would be "a natural destination for international investment". Along with distribution, he said that meant focusing on skills training for crews and the infrastructure of studios, post-production companies and service companies. At the same time, he called for a re-definition of a British film to "reflect the fact that actual production increasingly will take place in countries with a lower cost base than ours."

Although there was little in Parker's speech to cheer arthouse filmmakers, at least directly, he did speak of the need to maintain an environment for "British films of enduring cultural significance".

"It's not either/or. It's both. We must stop talking about the British film industry and start considering our film industries."

Responding to Parker's speech, Film Minister Kim Howells said: "Film is at the very heart of this country's cultural life, with 175 million visits to cinemas likely this year, the highest number for more than 30 years.

"This is reflected in the importance the Government places in the UK being fully involved in the global film industry. For example, we have introduced new tax reliefs and have set up the Film Council to act as a lead body for film and as distributor of National Lottery funds. This will help ensure that films continue to be made in the UK and new talent is encouraged to develop and flourish here.

"Alan Parker and the Film Council have set out their vision for the future, and are encouraging debate about where the industry goes from here. This is to be welcomed. The key issues they have identified - education and skills, the distribution of films as well as production, and the role of the UK's industry working with the rest of the world through sales or in the making of films - are all major areas of concern.

"We look forward to working with other Government departments and the Film Council and to taking an active role in discussing the proposals."

For the full text of Alan Parker's speech Click Here