The Culture, Media and Sport Select Committee has criticised the government's tourism policy and called the decision to cut VisitBritain funding ahead of the 2012 Games as "simply baffling."

In a report into the state of tourism in the UK, the cross-party group accused the government of having lost the confidence of the tourism sector.

"The committee is concerned by the lack of confidence that the tourism industry appears to have in the DCMS," the report said. "The DCMS has been widely criticised for not adequately representing the industry across government.

"We are also discouraged that responsibility for tourism has been so frequently transferred between departmental ministers – seven ministers since June 1997 – creating an impression that tourism is viewed by the government merely as an afterthought."

The heaviest criticism, however, is reserved for the DCMS' decision to cut funding for VisitBritain ahead of the 2012 London Games. The cut, from £49m in 2007-8 to £40.9m in 2010-11, was a result of the government's Comprehensive Spending Review (CSR) in October 2007, which, according to the DCMS, identified space for reform within the way VisitBritain was run.

"In our view, VisitBritain is generally a well-run and efficient organisation and we regard the government's attempted explanation of its decision to cut funding as wholly unconvincing," the report said.

"While recognising the tightness of this year's public expenditure settlement, we find it extraordinary that ministers took the decision to concentrate all of the pain on the department's funding for tourism. The decision to cut resources is simply baffling and should be reconsidered."

The report was welcomed by both UKInbound and VisitBritain.

Stephen Dowd, chief executive of UKInbound, said: "This well balanced and thoughtful report detailed the industry’s lack of confidence in the DCMS, poor cohesion in the national tourism structures and a need for stronger leadership from DCMS.

"The budget cuts to VisitBritain were indeed baffling and leave the national tourist board unable to fulfil some of its core functions, let alone deliver on the Government’s own strategy to realise the full potential tourism benefits of the 2012 Games.”

Tom Wright, VisitBritain's chief executive, added: "We're delighted that the committee has found that there's a strong case for increasing the resources to VisitBritain from central Government."

According to figures in the report, the UK's global market share of tourism receipts declined from 6.5 per cent in 1980 to 3.8 per cent in 2005.