By Oliver Hotham

Government departments set up to save money have ended up overspending by up to £500 million, the National Audit Office (NAO) revealed today.

The "pooled resource centres", which merged functions like personnel and IT, were intended to save £159 million but instead failed to break even and the cost to the tax payer is now estimated to be £126 million.

A spokesperson for the NAO said the process had resulted in "over-complexity, reduced flexibility and a failure to cut costs".

They added: "The new Cabinet Office strategy on shared services acknowledges these issues but, if it is to achieve value for money, it must learn the lessons from past implementation.

"Only in this way can the sharing of back-office functions have a realistic prospect of contributing towards the government’s drive to cut public spending in the long term."

The report also cites an absence of clear management in the failure of the programs to cut costs and praised the coalition for its new strategy dealing with the issue.

No savings have so far been made because of the schemes.