For a first-time feature-film director, tackling a story which spans the globe, examines hugely powerful and divisive issues, and stars acclaimed actors such as Emily Watson, is a daunting task. Yet for Jim Loach, son of director Ken Loach, filming a dramatic take on the story of Australia's "lost children" was a feat he was determined to pull off.

Oranges and Sunshine, which opens in UK cinemas on 1 April, is both an expansive tale and an intimate one. It centres on a semi-secret programme to transport poor British children to Australia, often without the knowledge of their parents. It also tells the story of the humble Nottingham social worker who helped many of them discover their identities many years later. While thousands of children were moved over a period of decades, the film focuses tightly on the experience of just a few of the policy's victims. For Loach, this was the only way to tell the story.

"Documentary can expose the facts, point the finger and bring people to account," says the London-born director, who has previously worked in factual film-making and TV. "But I think a drama can explore the themes in a much more interesting, human way – themes such as identity and the role of the church. For me, it's a more rounded way of looking at it."

Loach first met social worker Margaret Humphreys, who has worked to reunite migrants with their families for 24 years, in 2002. But it wasn't until three years later that he began to grasp how her story could sit at the apex of a heartfelt and intense dramatic retelling.

"Camilla Bray [the film's producer] and I met Rona Munro [writer] in 2005," says Loach. "A few months later Rona and I came out to Perth and met Margaret again. We spent a couple of weeks with her and also some time with two former child migrants. It was really during that trip that we started to see how we could build the story and the narrative.

"Rona, especially, spent a lot of time with some of the former child migrants and heard a lot of their stories, so she had a wealth of material to go on. Right at the outset we had a sense of how we were going to approach it. It was very much Margaret's story.

"We never really wanted to make it a campaigning film. We were interested in exploring the nature of identity and what makes us who we are – and if you take all those things away from somebody, how do they come to terms with it? It was also quite a challenging scripting process because, of course, the real events happened over a very long period of time."

Who to cast in the role of Margaret was of paramount importance. Twice Oscar-nominated British actor Watson was always at the forefront of Loach's thinking.

"Once we'd got to draft five or six we got in touch," says Loach. "I just fundamentally felt that I could believe her as a social worker. For an actor of a certain stature, it's a challenge to put them in a tower block in Nottingham and to really believe it."

The film also features pitch-perfect performances from Australian actors David Wenham and Hugo Weaving, who play two of the child migrants. Loach was keen to avoid the obvious trap of depicting the men as victims.

"That wasn't our experience of the child migrants who we met," says Loach. "They have got an amazing dignity and strength about them, they really have. They don't strike you as victims.

"The guy that became the inspiration for the Len character - if you described him as a victim, or even if you offered him sympathy as a person, he would tell you to eff off! He's just not interested in being that person and we found that much more appealing to write. Much more complex."

Oranges and Sunshine opens in UK cinemas on 1 April.