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Nick Clegg calls public-sector pension scheme 'not fair and unaffordable' as he makes case for cuts to reduce budget deficit

Gold-plated public sector pensions emerged today as a central target for reform in next week's budget when the deputy prime minister, Nick Clegg, condemned them as unaffordable and the Office for Budget Responsibility (OBR) revealed new figures showing the net cost to the taxpayer of public sector pensions is due to more than double in four years.

The cost will rise from £4bn in 2010-11 to over £9bn in 2014-15, the equivalent of 20% a year in real terms.

In a speech designed to reinforce the case for cuts and put them in a progressive context, Clegg highlighted the unfairness of the pension situation and recent public sector pay awards.

He said: "Private-sector workers have already seen their final-salary pension schemes close while returns from defined contribution schemes fall. So can we really ask them to keep paying their taxes into unreformed public-sector pension pots? It is not just not fair, it's unaffordable."

Clegg said today's assessment by the OBR "shows our problems are more serious than we realised. There are no more excuses. We must get on with it."

The chancellor, George Osborne, rejected suggestions by his predecessor, Alistair Darling, that Darling deserved an apology over claims made by David Cameron last week that the true government borrowing figures were worse than Labour had forecast in the March budget.

Darling said that overall, the OBR report published today ahead of next week's budget showed £30bn lower borrowing over the next five years than Darling had himself forecast in his own budget.

He argued that this flatly contradicted Cameron's claim that "the overall scale of the position is even worse than we thought."

The two parties are locked in a battle between Labour claims that the Tories are cutting too much for ideological reasons and the Conservatives' argument that the Labour legacy was even worse than they had expected.

It is a political dispute that will have a huge influence over the way the public react to cuts when they start to be announced next week.

During Commons exchanges Darling warned that if the coalition government went ahead with its broad goal to eliminate the structural deficit by the end of the parliament, Osborne would be required to find £118bn by 2014-15 in reduced spending or higher taxes.

In a classic clash between the Keynesians and the deficit hawks, Darling cited those parts of the report drawn up by Sir Alan Budd, the chairman of the OBR, that seemed to endorse Labour's decision to step in with extra spending last year and this year to fill the gap left by the fall in private sector spending.

Darling warned the government â€" and the rest of the EU â€" of the real risk of driving the country into a Japanese-style long recession by slashing spending now, and by damaging investor and consumer confidence with the scaremongering that is being led by Cameron.

Darling appeared to endorse the OBR's slight downgrading in his own growth forecasts, saying this was due to recent sluggish growth in Europe, Britain's biggest export market.

He is anyway sceptical of the need for the Treasury to produce three to four-year growth forecasts, pointing out that most economists do not produce such long-range growth forecasts.

Darling said: "Far from providing political cover for the Conservative party and the Liberal Democrats for cuts and tax rises next week, the OBR report reminded us that growth is still fragile, and growth is essential to ensure jobs."

Osborne focused on the downgrading in growth forecasts since the March budget to 2.6% next year, arguing this led to an increasing structural deficit â€" that part of the deficit that will not be reduced by increasing growth.

Osborne has always cited the structural deficit as his preferred target and his aides said they believed Budd's methodology underestimated its true scale. His aides also warned that the eurozone crisis had increased the need for the cuts programme to start earlier and end more quickly. Darling countered that the structural deficit is harder to measure.

In highly political exchanges, Osborne also suggested Labour had proposed £44bn of spending cuts in its deficit reduction programme before the election, but it had not allocated a single penny for these cuts.

He said: "The Labour leadership contenders are busy taking their party out leftwards into the margins of British politics, and they are not addressing the central issue which is where are the spending cuts coming from. Until they do they will not be taken seriously in British politics."

Osborne's office does not seem disturbed by the size of the deficit reduction programme in Germany, even though the country is seen as the motor of Europe. It believes the German cuts are smaller than advertised by Angela Merkel's government and the true solutions to unemployment lie in the liberalisation of trade and structural reforms.