I'm not sure of the origin of the phrase (whether it is from that movie or not, haven't seen it), but it is in relation to the volume knob on a stereo, which traditionally goes up to 10. Therefore, going to 11 means going one more than maximum, more than what is technically possible.
It is from that movie that's where it came from and I think the saying is pretty common. I'm just not sure how popular it is in England, Its very popular here, kind of has a cult following.
Here you go, take a look:
http://www.youtube.com/watch?v=EbVKWCpNFhY&feature=related