George Osborne: We'll run a budget surplus
Chancellor George Osborne has said he wants the government to be running a surplus in the next Parliament and can get there without raising taxes.
He told the Conservative conference the public finances should be in the black when the economy was strong as insurance against a "rainy day".
His comments were taken as suggesting more years of spending restraint.
Business welcomed the goal but Labour said Mr Osborne had missed targets before and could not be trusted.
The BBC News Channel's chief political correspondent Norman Smith said Mr Osborne's underlying message was that austerity would continue after the next election despite the return to growth.
In his keynote speech in Manchester, Mr Osborne also said he intended to freeze fuel duty for the rest of the Parliament, up to May 2015, if the money could be found.
In other developments on the second day of Conservative conference:
- The long-term unemployed will have to undertake longer work placements in return for their benefits, under a new "help-to-work" scheme
- Transport Secretary Patrick McLoughlin said he was "proud" of the planned HS2 rail link and urged critics to stop "moaning"
- The UK Independence Party said it was open to local deals for its candidates to stand aside in seats with Eurosceptic MPs - but the Tories reject the idea
- Home Secretary Theresa May says foreign prisoners should be deported pending appeal
- Justice Secretary Chris Grayling said prisoners must pay for damage to their cells
The last time the government ran an absolute budget surplus - meaning that it generated more in revenues, including tax yields, than it spent - was in 2001.'No victory'
The UK has only balanced the books in seven out of the last 50 years.
Mr Osborne pledged to continue to keep control of spending even after the economic recovery was secured to avoid repeating the mistakes of "deluded" predecessors who believed they had abolished boom and bust.
George Osborne's new rule for the next parliament is easier to understand than the current one.
At the moment he aims to balance the books at the end of a five-year period, but the sums don't account for capital spending - the money that goes on big projects.
And they don't include the bit of the deficit expected to vanish as the economy recovers.
His new plan sees him aiming to get rid of the entire deficit by 2020, providing there's no recession, and keep capital spending growing at the same rate as the economy.
He will hold up his pledge as evidence of Tory prudence against a Labour Party he'll paint as spendthrifts.
Tory strategists will hope a plan to run up a surplus and provide investment sounds straightforward and appealing.
But it could mean extra austerity, and make quick tax cuts harder in the next parliament.
And Labour will be sure to remind him that he will fail to make good his original plan: scrapping the deficit under the current rules by 2015.
Setting rules and targets is one thing, sticking to them quite another.
By running a budget surplus in the good times, he would "fix the roof while the sun was shining" and enable the government to continue to meet its most important spending commitments on health, education, defence and pensions.
"And surely the lesson of the last decade is that it's not enough to clean up the mess after it's happened? You've got to take action before it happens," he told activists.
"It should be obvious to anyone that in the years running up to the crash this country should have been running a budget surplus.
"You've got to take action before it happens.
"So I can tell you today that when we've dealt with Labour's deficit, we will have a surplus in good times as insurance against difficult times ahead."
"Provided the recovery is sustained, our goal is to achieve that surplus in the next Parliament. That will bear down on our debts and prepare us for the next rainy day."
But the Institute for Economic Affairs think tank said Mr Osborne was "still failing to tackle government spending sufficiently" and would miss his target unless he got to grips with it.
In its most recent analysis, the Office for Budget Responsibility forecast the government would be running annual deficits until 2017-8. Among G8 nations, only Germany is in surplus.
Mr Osborne said he was optimistic about the UK's future economic prospects, saying the "sun had started to rise above the hill" after years of recession and flat growth.
But he said much more needed to be done to ensure improved living standards for this generation and the next and warned family finances would not be "transformed overnight".
"There is no feeling at the conference of a task completed or a victory won," he said. "The battle for turning Britain round is not even close to being over."
He said he hoped to freeze fuel duty until the end of the current Parliament if savings could be found to pay for the move. Fuel duty has not risen since January 2011.'Warm words'
In his speech Mr Osborne described Labour's policy to freeze energy prices for 20 months as "phoney" and compared Ed Miliband's political philosophy with that of Karl Marx.
He has pledged that even when the nation's books have been balanced he will keep the lid on spending in order to put aside money for the next rainy day”
But Labour said Mr Osborne could not be trusted to deliver a surplus, having already had to backtrack on a pledge to eliminate the structural deficit by 2015-6.
"As for George Osborne's pledges on capital spending and the deficit, nobody will believe a word he says," said shadow Treasury minister Rachel Reeves.
"His failure on growth means that far from balancing the books by 2015 as he promised, borrowing is now set to be £96bn.
"And for all the warm words about capital spending he is cutting it in 2015.
Business groups said Mr Osborne's focus on getting the economic fundamentals right was "heartening" but must be backed up by a "relentless focus" in the years ahead.
"Breaking government addiction to debt and achieving a surplus in public finances is the most important ambition any administration can have," the Institute of Directors said.