The Oscar-winning producer David Puttnam has issued a rallying cry to the film industry to address its yawning skills gap and grow audiences before the UK is eclipsed as a cinematic powerhouse.

In a speech to Bafta on Tuesday, Puttnam – the president of the Film Distributors’ Association (FDA) and a former peer – urged the industry to “invest far more” in its workforce to retain international competitiveness.

Speaking to the Guardian afterwards, he said: “Foreign investment in the screen industries will decrease because other countries will prove themselves more adept, more interesting and better value for money for the production sector.”

Launching the FDA’s 2023 Yearbook, Puttnam said underinvestment had created perilously high staffing costs. New data showed a scarcity of talent in mid-level production roles has resulted in significant wage inflation, with rises of 7-15% above the cost of living.

“For example, we’ve got about 10 really good cinematographers in the UK, but we need at least double that,” he told the Guardian. “Because if you want one of those 10, you’re going to pay way over the odds in order to get them.”

He cited the multiple Oscar- and Bafta-winning All Quiet on the Western Front as an example of a “brilliantly mounted” production outside the UK. “There will be investors in the US and elsewhere saying: ‘Do we really need to be in the UK and pay those excessive prices when we could actually do this film in the Czech Republic or Germany or elsewhere?’”

In particular, Puttnam said, the British industry was lacking heads of departments and craftspeople such as set decorators, designers and builders, as he emphasised the need to support entry-level training to address the gap.

“It’s not difficult getting runners, people just starting out, but what departments need is people with two, three years’ experience who’ve been there, done it, and had the edges knocked off them. There’s a really important, intensive job to be done in taking young people and optimising their experiences quickly.”

By his own calculations, a committed annual investment of £40m in skills could result in production savings of well over £100m, he said.

Puttnam spent 30 years as an independent producer of acclaimed films such as Chariots of Fire, The Mission, The Killing Fields, Midnight Express, Bugsy Malone and Local Hero, whose combined awards include 10 Oscars and 31 Baftas. After heading Columbia Pictures in the late 1980s, he returned to Britain and produced Memphis Belle, among other films.

The UK has the largest film and TV production industry in Europe and the largest by value outside Hollywood. Production spend on film and high-end TV reached a record £6.27bn in 2022, with inward investment delivering £5.37bn (92%) of that.

“The growth is phenomenal,” Puttnam said. “The government’s screaming blue murder for growth, and the film industry delivers it. If they or an incoming labour government drop the ball on this, they should be ashamed of themselves.”

The UK and Ireland market is also the world’s fifth-biggest global box office territory, with cinema admissions at 169 million in 2018, 177 million in 2019 and 117 million in 2022 after the pandemic. But further work was necessary to draw audiences back to theatres, Puttnam said, including tackling the problem at a grassroots level.

“I think more attention needs to be paid to smaller communities. Does your local cinema cater really to you? Is it well run? Is it clean? I came through at a time when the cinema manager was an important person. The projectionist was an important person. That’s still true with some independent cinemas, like the Curzon, but broadly speaking, in the multiplexes, I’m not sure that’s true any more.”

During his speech, Puttnam also announced he was stepping down as president of the FDA after 16 years. He urged the entire industry, including streaming services, to come together to address changes in the film landscape after Covid.

“I think it’s fantastic to see both Amazon and Apple making serious commitments to releasing their works on the big screen, recognising the added value it delivers – and to see the reaffirmation by all the major studios of their commitment to theatrical release,” he said.

Puttnam also welcomed the new industry-led skills taskforce announced last week, which will be chaired by the former Amazon Studios Europe boss Georgia Brown and will address critical skilled labour shortages in the UK’s production sector.

“We also need the entire government, not only DCMS [the Department for Digital, Culture, Media and Sport], but DfE [the Department for Education], HMT [the Treasury] and the team behind that door at No 10 to put their focus and political energy, every bit as much as their words, behind meaningful action,” he said.