Control of the UK tourism industry should be transferred from the Department of Culture, Media and Sport (DCMS) to the Department for Business, Innovation and Skills (DBIS), according to a new report by the British Chambers of Commerce and Travelodge.

The Backing UK Tourism: Destination Recovery report said that despite being the fifth largest sector of the UK economy, employing 1.4 million people and generating revenues of £86bn, further growth of the tourism industry is being held back by mismanagement by the government.

It said that tourism is “nominally coordinated by one of Whitehall’s most junior departments, the DCMS” and that more than 100 public sector bodies operate in isolation without clear vision from the centre.

The report claims that this “dysfunctional approach” is borne out by passenger numbers to the UK deteriorating by 18 per cent between 1997 and 2007 and the industry having the second-worst balance of trade tourism deficit in the EU.

Dr Adam Marshall, director of policy at the British Chambers of Commerce, said: “Tourism will play a key role in Britain’s future economy but the industry needs stronger, clearer support from the government to reach its full potential.

“This is a sector that can rapidly create jobs, even in the current economic conditions, yet it suffers from an extremely confused support structure. Ministers need to recognise the potential of the industry and make necessary reforms, which will help underpin the UK’s economic recovery.”

The report recommends that responsibility should be moved from the DCMS to the DBIS to ensure better coordination of funding and a minister solely responsible for tourism should be appointed and that regional development agencies should be accountable to the DBIS.

It also recommended that VisitBritain should be given the “necessary freedom, support and funding to enable it to focus on the marketing the UK abroad” and the Tourism Statistics Agency must be adequately funded “to ensure robust statistical information about the sector is available”.