In a move that threatens to bring UK production to a virtual standstill, powerful local performers' union Equity has told its members not to agree to any contracts for feature films that would mean working on or after December 1.

The call marks a serious turn in Equity's talks with UK producers' body PACT to secure profit participation for its members similar to the residuals US actors enjoy through SAG contracts. Equity said on Tuesday that it had told its members to say no to any contracts from December because of "the lack of progress over the last 15 months" in the talks with PACT over a new agreement. The existing arrangement runs out in November.

"The council has extended the deadline that was on the agreement from November 1 because it wants serious talks to go ahead," said a spokesperson. "The very last thing that Equity wants is for any feature films to be damaged by this."

But the uncertainty created by today's call is expected to damage both local production and the level of inward investment into the UK. Projects that could be hit include Bond 20 and Working Title Films' Johnny English, both expected to start shooting in the UK early next year.

The union said it is in negotiations with Warner Bros. over the sequel to the first Harry Potter film. The deal is expected to allow Equity members to work after December 1 on the film on condition that they receive a share of revenues from ancillary windows.

"Warner Bros. approached us and made an offer," said the spokesperson.

The threat of a US actors strike has already impacted on the UK, with inward investment from Hollywood productions plummeting by more than 65% in the first six months of this year, according to figures from the British Film Commission. The total value of overseas productions to start shooting in the UK in the first six months of 2001 crashed to $109m.

Equity, which has about 36,000 members, points out that UK actors on Mission: Impossible did not get the same shares in the film's box-office success as day-players on SAG contracts. Under the current arrangement, Equity members receive a flat fee.

PACT argues that, unlike the US studios, UK independent producers typically finance independent films by pre-selling rights, a hard enough process without having to persuade distributors to part with a share of future profits. It also maintains that the UK's attraction as a location for overseas productions might be harmed if foreign companies have to pay UK actors a share of profits.

In a statement, PACT said that it had offered Equity members the option of either sharing a percentage of producers' net profits or receiving royalties on sales in UK primary and secondary television markets and UK video and DVD markets. The revenues would only kick in after 'first uses' pre-purchased at the time of an actor's engagement.

"PACT considers that it made a reasonable offer to Equity and regrets that this has been rejected," said the statement. "PACT regrets the issuing of instructions to Equity members not to accept any film engagements after 1 December since it believes that such a move will in itself deter investment in, and reduce film production in, the UK."

Producers point out that, even if they could arrange a system giving actors a share of profits, enforcing deals with far-flung distributors is tough, while revenues can take years to materialise anyway. Richard Holmes said that he has only just started seeing the upside from 1997 UK hit Shooting Fish. "We can't give out profits until we see them ourselves," said Holmes.

But he sees the current talks as an opportunity for producers as much as actors to address the revenue flow from UK films. "They should fight with the broadcasters," he said.