Government plans to cut funding for VisitBritain will seriously undermine the agency’s remit of promoting the UK as a destination for overseas consumer and business tourism, according to the Tourism Alliance.

“VisitBritain has been asked to indicate where it could cut up to 7% from its present budget for overseas marketing as part of the Government’s Comprehensive Spending Review,” explained Kurt Janson, the Alliance’s policy director.

This amounts to £2.5 million off a budget of £35.5 million that itself has been frozen since 1997.

Commenting on the impact, Janson said: “This move will simply compound VisitBritain’s funding crisis. Despite claims from the Government that it supports the tourism industry, the overseas marketing budget is a paltry amount in global marketing terms. It is rivalled by the marketing budgets of some small Caribbean islands and is less than half the £72 million that Tourism Australia spent on its ‘Where the bloody hell are you?’ campaign.

“It’s hardly surprising, then, that while the Government has ignored the need to market Britain overseas for the past 10 years, the average length of stay and spend per trip to the UK has declined and Britain’s share of the global tourism market has decreased,” he continued.

The reduction in funding will apply from 2008/9 to 2010/11 raising concerns that VisitBritain will be unable to maintain even routine overseas marketing activity during the crucial run up to the 2012 Olympics in London.

“Doing this in the lead-up to the Olympics not only defies belief, it is something that one would have thought a media-savvy government such as Labour would have recognised as misguided,” said Janson. “It makes little sense to cut funding to an organisation that did not benefit from former increases and actually generates approximately £200 million for the Exchequer each year.”

What's more, VisitBritain's latest annual review, published on 25 October, shows just how well the agency is performing. Marketing Britain in 36 international markets, it succeeded in generating an average return on investment over the last three years of £44 in inbound visitor spending for every £1 from the public purse – out-performing its Government-set target of 30:1 – with some campaigns exceeding this figure.

The website visitbritain.com was also named the World’s Leading Tourism Authority Internet Site for the third year in a row.

Tourism is one of the largest industries in the UK, accounting for 3.5% of the UK economy and worth around £74.2 billion.