An English businessman accused of damaging the Harris tweed industry has angered islanders by bankrolling a £1m “vanity” film about the history of the cloth while laying off half of his staff.

Brian Haggas, a 76-year-old Yorkshireman who owns Scotland’s largest tweed mill on Stornoway, has lavished money on the film while ceasing production at his mill until next year.

Donald John Mackay, who runs a rival weaving company, claims he was duped into supplying cloth for the documentary by London-based film-makers. He claims he would never have co-operated if he had known Haggas was behind the project.

The 30-minute film, The Harris Tweed Story, relates the history of the cloth from the mid-19th century to the present day through the eyes of a fictional island family. Some filming took place at the newly reopened Shawbost mill on Harris, as it has a more traditional look than the Kenneth Mackenzie mill Haggas bought in 2006.

Cloth for the production was made by MacKay, of the Luskentyre Harris Tweed company, as Haggas’s firm has ditched mass production to concentrate on men’s jackets. MacKay, whose company supplied tweed to sportswear giant Nike for a range of trainers, said he was approached to make two pieces of cloth for the production but was assured Haggas was not behind the project. Earlier this year, Mackay was told Haggas’s mill would no longer wash and finish his acclaimed fabric.

“A production company from London contacted me and when I got correspondence from them there was no heading on it,” he said. “I did ask on two separate occasions was Mr Haggas involved and I was categorically told no. I wouldn’t do anything for him, he doesn’t deserve it. He doesn’t give a damn for our product or our way of life. It’s him that’s number one, he’s not doing it for us, he’s doing it for himself.

“We have now been told Mr Haggas is behind it which we find very strange because he is reducing the industry. Why is he spending money on this when he has mothballed his mill and so many people depend on it for their living?”

Haggas’s mill, which produces 95% of all Harris tweed, made 36 of its 78 staff redundant last month. Two smaller mills on Lewis which have been revived are not yet able to keep the 130 home-based weavers in work.

The film is being directed by Peter Richardson, who made The Comic Strip Presents comedy series, and the costume designer is Jenny Beavan, who won an Oscar for her work on Remains of the Day

Haggas said the film was for the benefit of the entire Harris tweed industry, which he insisted would be “extinct” if he had not come along to revive it.

“This industry has been in decline for 35 years and all these armchair critics have done absolutely nothing. We are reviving it and this film is part of that. I told the production team I want it to be an Oscar winner,” he said.

“The Harris tweed is a fabulous and unique product but there has been no selling or marketing of any description for years and years and years. The problem is the people on the islands are under the impression that the world is crying out for Harris tweed; it is nothing of the sort. This is not a commercial, this film is for the benefit of all those involved in Harris tweed.”

He said he had no knowledge of Mackay being approached to provide cloth for the film.

The production company said the organising of props for the film had been outsourced to another company

Alasdair Allan, MSP for the Western Isles, said he welcomed attempts to promote tweed internationally, but there were concerns about Haggas’s business strategy. “I have indicated my concerns about the direction that Mr Haggas has been going in since he bought the mill. But I am optimistic about the other mills in Lewis which have resumed production in the last few months and believe tweed is vital for the island’s future.”

Lorna McAulay, chief executive of the Harris Tweed Authority, said: “I am aware and sensitive of the public perception of this in terms of the investment by Mr Haggas in something not directly related to the production of cloth. But if the film is marketing Harris tweed to the wider world then we are pleased.”

Times Recommends

• Four months to save £300m masterpieces
• Rainy Manchester high in happiness league
• Farmers count cost as rain ruins harvest