The British government has announced plans to sell off its remaining stake in the Royal Mail and slash ministry budgets in a bid to cut STG4.5 billion ($A8.87 billion) from state debt this year.

Finance minister George Osborne said on Thursday that the government would waste no time in pursuing their goal of balancing the books.

The sale of the government’s 30 per cent stake in the Royal Mail postal service is expected to earn the state about STG1.5 billion, the Treasury said in a statement.

A further STG3 billion of savings have been identified for this year in government departments, including STG500 million from the defence budget.

Osborne said ministers were “getting on with what we promised.”

“When it comes to living within your means, the sooner you start the smoother the ride,” he said.

The Conservatives have promised to reduce departmental spending by STG13 billion as they seek to eradicate the deficit by the 2018-19 financial year.

They have also vowed to cut STG12 billion from the welfare budget, but have not said how this will be achieved.

The deficit remains stubbornly high, at 5.2 per cent of GDP in the 2014-2015 fiscal year. This is well above the EU limit of three per cent, and earned Britain a slap on the wrist from the European Commission last month.

In 2013, the government sold off more than half of the Royal Mail in an initial public offering that drew severe criticism for failing to achieve value for money.

The company was floated at 330 pence per share but on the first day of trading, shares closed at 455 pence. At the close of markets on Thursday the price was 500 pence.

“That business is now thriving after we gave it access to investment from the private sector in the last parliament,” Osborne told lawmakers.

“There is no reason we should continue to hold a minority stake.”