The Department of Energy and Climate Change (DECC) has defended a £400m budget underspend from last year, after concerns were raised by some green businesses that the government had cut back unnecessarily on green spending such as the Feed in Tariffs.

According to a new Treasury report, DECC failed to spend nearly 14 per cent of its 2011/12 budget, representing the largest proportional underspend of any government department.

In total, government departments cut their spending by £6.7bn more than was planned last year, meaning government spending fell by 5.2 per cent in real terms between 2010-11 and 2011-12, instead of the expected 3.5 per cent drop.

The largest under-spender was the NHS, which saved £1.7bn. However, DECC emerged as the department that underspent the largest proportion of its budget.

The news is likely to prompt criticism that DECC's programme of cuts, which saw slashed budgets for bodies such as the Carbon Trust and the Energy Savings Trust, was more wide-ranging than necessary.

It has also angered some solar pv installers, which have been urging the government to increase the spending cap for feed in tariffs, instead of making deep cuts to the popular incentive scheme.