By Guy Faulconbridge and Andrew Osborn
MANCHESTER, England (Reuters) - British finance minister George Osborne will propose 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 will promise he can sustain a recovery of Britain's $2.5 trillion economy, but caution there can be no complacency.
"What really drives an improvement in living standards is an economic policy that creates jobs, keeps mortgage rates low, helps people keep more of their income tax free," Osborne told the BBC ahead of the speech.
Osborne's pitch is designed to counter the opposition Labour Party's charge that Prime Minister David Cameron has presided over a cost of living crisis. It is 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.
He will say he wants 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, will warn that higher living standards will not be instantly improved.
"Family finances will not be transformed overnight," Osborne will say according to remarks released by his office ahead of time.
"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."
While a recent poll shows Ed Miliband's Labour Party leads the Conservatives by 11 percentage points 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 will cast Labour as the party of profligacy, will force some 200,000 long-term unemployed people to do community service or search for a job daily if they want to receive state-funded unemployment benefits from April.
"People understand in this welfare debate that there needs to be a bit of tough love and this is what this programme delivers," Osborne told the BBC.
The 'Help to Work' programme 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 over 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)