It is very widely used in the UK. There is even an entry in the OED for it, with examples from 1885 to 2005. Seems to have its origin in the late Victorian era.
One explanation I have seen on the web, possibly apocryphal, is that it dates from the time of town criers. The people whose job it was to call out the news started from the Town hall and moved outwards. The streets closest to the centre were 'streets ahead' of the outer places in being kept informed. This may or may not be its origin.
The OED meaning and examples are:
c. streets ahead (also better) : far ahead of someone or something,
far superior.
1885 Freeman's Jrnl. (Dublin) 10 Oct. 6/6 M J Hayes..won streets
ahead of a very weak opposition.
1898 Westm. Gaz. 1 Feb. 6/3 The English are better photographers
than the Americans, but as regards mechanical ingenuity..the latter
are streets ahead.
1911 Times 22 Apr. 8 In the matter of nutriment Manitobas were
‘streets’ ahead of any flour that could be produced from English
wheat.
1958 Times 27 Oct. 4 His distribution was streets better than that
of Greenwood, who was always in trouble.
2005 Daily Tel. 27 Oct. b 5 The company [sc. Toyota] is streets
ahead of GM on profitability.