Osborne seeks political capital from recovery before 2015 vote

By Andrew Osborn and Guy Faulconbridge

MANCHESTER, England (Reuters) - Chancellor George Osborne on Monday placed the government's economic record at the heart of his Conservative party's campaign for re-election in 2015, offering the promise of welfare reform, tax cuts and a new wave of home ownership.

Contrasting his party's success in delivering a recovery with what he called the opposition Labour party's "catastrophic failure of economic policy" when in power, Osborne used the Conservatives' penultimate conference before the election to urge voters to let his party complete its economic plans.

"We have to deal with our debts and see our plan through," he told delegates, to frequent applause, saying the economic crisis had taken Britain "to the brink" and that another crisis could push it over the edge if it did not keep reducing its almost 1.5 trillion pound ($2.43 trillion) national debt.

"This battle to turn Britain around - it is not even close to being over. We are going to finish what we have started."

In 2010, Osborne said he had inherited Britain's largest peacetime debts from Labour, which left a note saying there was "no money" left. Although the economy is now showing signs of recovering, it has been stagnating for much of the past three years.

On Monday, Osborne, who said he had managed to cut the deficit by a third, likened Labour leader Ed Miliband's economic policies to those of Karl Marx, contrasting them with his own approach of "sound public finances" and encouraging voters' "aspiration" to live better.

Eleven points behind Labour in a recent poll, he also held out the prospect of static petrol duties 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.

His party has already brought forward a 12-billion pound mortgage guarantee plan to help people borrow to buy their own homes, an echo of former Conservative Prime Minister Margaret Thatcher's policy of letting people living in state-owned housing buy their homes.

Osborne told voters they would "share in the rewards" of the economic recovery he said he had engineered.

"What I offer is a serious plan for a grown-up country," he told delegates. "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."

LIVING STANDARDS

The Conservatives have been forced to react to a promise by Labour, at its own conference last week, 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 fluctuating polls, some showing Labour had almost no lead only a few weeks ago, its prospects of winning the election in May 2015 remain uncertain and the most likely scenario remains a hung parliament that would probably lead to a two-party coalition government of some kind.

Osborne, who is also one of Prime Minister David Cameron's closest election advisers, used his speech to promise reform of Britain's welfare system, saying he wanted to end its "something for nothing" culture.

His answer: to oblige 200,000 long-term unemployed to undertake activities such as community work or face losing a portion of their welfare benefits.

Osborne's pitch 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.

Even though 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.

Labour says the Conservative-led coalition government has failed millions of ordinary families who are poorer 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.

"After three wasted years, George Osborne still has nothing concrete to say on helping families with the rising cost of living," said Rachel Reeves, Labour spokeswoman on economic affairs.

"As for George Osborne's pledges on capital spending and the deficit, nobody will believe a word he says. His failure on growth means that far from balancing the books by 2015 as he promised, borrowing is now set to be 96 billion pounds. And for all the warm words about capital spending he is cutting it in 2015."

(Editing by Andrew Heavens and Robin Pomeroy)

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