Committee chairman Gerald Kaufman

Ministers have been urged to extend tax breaks for the British film industry.

In its latest report the Commons culture committee called for more help for the sector.

The cross-party committee said that tax incentives would stimulate film-making and encourage exports.

It is also called on new regulator Ofcom to be given responsibility to review the amount broadcasters spend on film production.

The industry, which was worth £533 million to the UK economy last year, has struggled to expand despite tax breaks and millions of pounds in lottery money.

Channel 4 has virtually shut down its film production arm Film Four and Britain has had few big international hits not reliant on American money since the "Full Monty" in 1997.

In order to encourage inward investment from Hollywood the committee encouraged a lower tax burden in order that Britain studios can compete with international competitors such as Australia, where the exchange rate makes costs much lower.

The chancellor's tax break of 1997 has encouraged spending on production of £2.59 billion in the past six years but the initiative is due to expire in 2005.

The MPs warned that 51,000 UK jobs could be threatened by a contraction in spending.

"We would like to see increased levels of support for film production and exhibition of British product from the public service broadcasters," the committee said.

And cross-party group singled out the BBC for particular criticism over its investment in film production.

"There is little to suggest that the BBC had a serious strategy," the report claimed.

"We urge the BBC to review its approach and level of commitment to feature film production, in consultation with the UK Film Council, given the significant comity of interests in this area."

Committee chairman Gerald Kaufman added that the BBC's tradition of film production was under threat.

"We're not implying for a moment that the BBC's prime activity should be the making of cinema films and support for the film industry, but at the same time the BBC does have some record of making films of high quality, like 'Mrs Brown'," he said.

"What we're saying is that the BBC has a record - we're worried that that record is not going to be continued in the same way.

"We would like them to have a co-ordinated structured approach in the same way that Channel 4 did with Film Four."