Departments underspend by £6.7bn

Government departments cut their spending by £6.7 billion more than was planned over the last year, a Treasury report revealed.

The Government spent £11 billion less than its budget between 2011 and 2012, rather than the £4.4 billion it had previously forecast, according to the Institute for Fiscal Studies.

The National Health Service - Whitehall's biggest department - made the greatest saving, of £1.7 billion, which was 1.6% of its budget for the last year.

But the much smaller Department for Energy and Climate Change saved £400 million, which equates to 13.9% of its 2011-12 budget.

The extra £6.7 billion saving includes £1.4 billion of reserve funding held by the Treasury that did not need to be spent.

£900 million of the savings will now be carried forward for departmental spending next year.

On average, departments spent 98.6% of the money they were allocated in 2011-12.

The report suggested the tightening of the purse strings might be down to government departments not wanting to overspend, which would be frowned on by the Treasury in the current financial climate, and that by over-delivering on cuts now would leave them better placed to face tight budgets in the future.