By Andrew Osborn and Guy Faulconbridge
MANCHESTER, England (Reuters) - British finance minister George Osborne proposed tougher new welfare rules on Monday to try to win over working voters who are grappling with depleted spending power ahead of the 2015 election.
Speaking to Conservative Party activists at the penultimate conference before the election, Osborne promised he could sustain a recovery of Britain's $2.5 trillion economy, but cautioned there was no room for complacency.
Eleven points behind the opposition Labour party in a recent poll, Osborne held out the prospect of static petrol prices between now and 2015, said he would aim to return Britain to a budget surplus if his party won, and said he'd also increase investment spending by the same pace as economic growth.
"What I offer is a serious plan for a grown-up country," he told delegates to regular bouts of applause. "That will create jobs. Keep mortgage rates low. Let people keep more of their income - tax free. It is the only route to better living standards."
Osborne's pitch was designed to counter Labour's charge that Prime Minister David Cameron has presided over a cost of living crisis. It was meant to appeal to working Britons who, according to polls, feel the country's annual 200 billion pound ($320.7 billion) welfare system is too generous.
The Conservatives are on the backfoot after Labour held its own conference last week and promised to freeze people's energy bills if elected, a pledge that helped push up its lead in some opinion polls from around three to 11 points.
But with its poll lead all but wiped out only a few weeks ago in some surveys, Labour's prospects of winning the next election remain uncertain and the most likely scenario remains a hung parliament that would probably lead to a two-party coalition government.
Osborne, who is also one of Cameron's closest election advisers, said he wanted to end "a something for nothing" culture by obliging Britain's 200,000 long-term unemployed to undertake certain activities such as community work or face losing a portion of their welfare benefit.
The move, unveiled along with a new slogan "For Hardworking People", is likely to resurrect a long-running political row that critics say engenders divisive politics.
Casting the Conservatives as the party of lower taxes, cheaper mortgages and economic prudence, Osborne, who has staked his reputation on reducing the largest peacetime budget deficit, left by the 1997-2010 Labour governments, warned that higher living standards would not improve instantly.
"We can make the recovery a lasting one. But it won't happen by itself - many risks remain. We have to deal with our debts and see our plan through. If the recovery is sustained then families will start to feel better off," he told delegates.
Even though Ed Miliband's Labour Party is ahead in the polls overall, voters still consider Cameron the politician they trust with Britain's economy, the world's sixth largest.
The gamble Cameron and Osborne are making is that the recovery, combined with a plan to guarantee the mortgages of homebuyers and potential tax cuts, could hand them victory in the election in May 2015.
TO BUY, TO WORK
Osborne, who cast Labour as the party of profligacy, wants to force around 200,000 long-term unemployed people to do community service or search for a job daily if they wish to receive state-funded unemployment benefits from April.
"No one will get something for nothing," said Osborne. "Because a fair welfare system is fair to those who need it and fair to those who pay for it too."
The 'Help to Work' program will cost 300 million pounds and be financed by savings to be announced later in the year.
By tinkering with a welfare system that swallows more than a third of his budget, Osborne hopes to win over working voters who polls show support changes to welfare.
Labour says the Conservative-led coalition government has failed millions of ordinary families who are poorer now in real terms than at the 2010 election, while some investors have cautioned that Cameron risks inflating a property bubble with his mortgage guarantee plans.
House prices in England and Wales posted their biggest month-on-month gain in more than six years in September, but talk of a price bubble is overdone, property analysis firm Hometrack said in a survey on Monday.
(Editing by Jeremy Gaunt and Andrew Heavens)