Public spending cuts which would shave billions of pounds off the UK welfare budget would continue until 2020 if the Conservatives win the 2015 election, Chancellor George Osborne said.
In his speech to the Conservative conference in Manchester, Mr Osborne, pictured, put clear blue water between his party and both Labour and the Liberal Democrats by announcing that the Tories would run a budget surplus in the next parliament rather than merely balance the nation's books.
Mr Osborne said the surplus would be an "insurance against difficult times ahead" to avoid repeating the Labour mistakes that resulted in a massive deficit. "This time we are going to fix the roof when the sun shines," he said.
The budget for infrastructure projects would be protected and Mr Osborne raised the prospect of tax cuts for working people while promising to avoid tax rises.
But he admitted that would require a permanent squeeze on day-to-day spending by government departments.
With the health, schools and state pension budgets safeguarded, Treasury sources admitted the annual bill of £200bn (€239bn) for welfare and tax credits would be hit.
A new "cap" could see benefits rise annually by less than inflation or the growth rate in the economy until 2020.
New fiscal rules to entrench the surplus will be announced next year and be included in the Tory manifesto.
The Liberal Democrats have blocked proposed curbs to housing benefit for under-25s and limiting welfare payments to two children per family, which would be back on the agenda if the Tories win a majority in 2015.
The Liberal Democrats will not sign up to the tough new fiscal mandate.
"This is Tory policy," said a Liberal Democrat source.
Mr Osborne added: "The battle to turn Britain around is not even close to being over and we are going to finish what we started." (© Independent News Service)