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Chancellor George Osborne will today finally destroy his party’s claim to be compassionate Conservatives with a cruel assault on the most needy.

In one of the meanest shake-ups of the welfare state, the heartless Chancellor is to announce plans to force the jobless to work for nothing or face having their benefit payments slashed.

And, as his right-hand man revived the days of the workhouse, David Cameron yesterday ruled out tax rises for his rich cronies while ordinary families continue to be hit by rising living costs, a failure to create jobs and cuts to public services.

Mr Osborne plans to make the 200,000 long-term jobless cook for the elderly, clean up litter or help out in charities for free as part of a 30-hour-a-week ­community scheme. The £300million Help to Work project will also target those with drug or literacy problems with Mandatory Intensive Regime to get them off the dole. If they do not comply, they will lose money.

But critics warned the move was a cynical Tory ploy to exploit the jobless and avoid paying for ­dedicated public service staff – while also stigmatising the poor.

Labour MP Ian Lavery said: “This is an outrage. We have a failed economy and there’s not enough jobs. This is a ­throwback to the days of the workhouse of the last century. We should be looking at creating more jobs and paying a living wage. This is the sort of thing the Tories enjoy… baiting people on benefits and baiting the ­unemployed. It’s a sport of theirs.”

Disability campaigner Sue Marsh added: “This is designed to divide and conquer and convince us a problem exists that suits the Tory agenda, when it doesn’t.

“The out-of-work jobseekers’ ­benefits bill makes up just 3% of the total welfare spend and 94% of jobseekers find work within two years. So Osborne’s announcement will address just 0.15% of the total benefit bill.” Labour frontbencher Ian Murray added: “This Chancellor scrapped the successful Future Jobs Fund.

“People want to work but he’s failed to create the jobs required and now wants to blame the unemployed.”

Millionaire Mr Osborne, who benefits from a trust fund, will tell the Tory ­conference in Manchester: “No one will get something for nothing.

“For the first time, all long-term ­unemployed people who are capable of work will be required to do something in return for their benefits to help them find work. They will do useful work to put something back into their community making meals for the elderly, clearing up litter, working for a local charity.

“Others will be made to attend the job centre every working day. And for those with underlying problems, like drug ­addiction and illiteracy, there will be an intensive regime of help. What I offer is an economic plan for hardworking people. That will create jobs. Keep ­mortgage rates low. Let people keep more of their income tax free. Our economic plan is the only plan for living standards.”

But Labour insisted the Chancellor should be creating jobs to get people off the dole following years of harsh Tory austerity and rising living costs that have left the average family £1,300 worse off. A source said: “It’s taken three wasted years of rising long-term unemployment and a failed work programme to come up with this new scheme.

“But this policy is not as ambitious as Labour’s ­compulsory jobs guarantee, which would ensure there is a paid job for every young person out of work for over 12 months. Under the Tory scheme people would be allowed to languish on the dole for years without a job.”

Mr Osborne’s harsh US-style workfare programme will begin in April.

The assault on welfare comes as Mr Cameron again ruled out tax rises for the rich in favour of more public cuts.

He said taking more money off the wealthy to pay for schools, hospitals and defence was “not sensible for a country if it wants to support wealth creation”. On the opening day of the conference he also announced policies that included pulling out of the European Convention on Human Rights. And his shift to the right was reinforced by party chairman Grant Shapps who set out plans for new anti-union laws – as his boss appeared to doze off in the audience.

Mr Cameron announced he was bringing forward the Help to Buy scheme where the Government ­underwrites the ­mortgages of those wanting to move. One insider said the Tories had been panicked by Ed Miliband’s plans to freeze energy bills. The source added: “This was not planned. There was almost nothing in terms of cost of living planned this week. This screams to me of Osborne and Cameron going, ‘We haven’t got a big announcement on cost of living’.”

The PM yesterday agreed to TV debates at the next election but said he would prefer them to take place months before polling rather in the final weeks as it “took up too much time”.

But he insisted UKIP leader Nigel Farage should not be allowed to take part. He added: “It should be about people who have a prospect of becoming Prime Minister.”

But Tory think-tank the Bow Group said the party must form an alliance with UKIP – or face being wiped out due to its haemorrhaging support and the far-right group’s growing popularity.