A WAR of words is set to erupt between Labour and the Tories as both parties attempt to seize the initiative on spending cuts.<br /><br />George Osborne will today announce that a Tory government would increase the state retirement age to 66 by 2016, ten years ahead of Labour&rsquo;s deadline, in a bid to cut the deficit.<br /><br />Millions of people that are currently under 58 will need to work one year extra under the Conservative plans, a move that the party says will reduce government spending by up to &pound;130bn over a decade.<br /><br />Under Labour, the age at which men could claim a state pension would increase to 66 in 2026, while the retirement age for women would rise to 61 next year and then, in increments, to 64 by 2016.<br /><br />But Osborne will frame the controversial acceleration of these plans as a necessarily tough stance that will help reduce a deficit which is expected to rise to &pound;175bn this year.<br /><br />&ldquo;This is another one of those trade-offs any honest government has to confront,&rdquo; Osborne will tell delegates at the Tory party conference today.<br /><br />But Labour last night launched its own initiative to address the deficit, saying it will today announce a pay freeze for public sector management.<br /><br />In a move that some will view as an bid to sabotage Osborne&rsquo;s announcements on spending, chancellor Alistair Darling will unveil his intention to demand a pay freeze for around 40,000 top earners in the public sector.<br /><br />The freeze will apply to senior NHS managers, GPs and senior civil servants, while around 700,000 other public service workers will receive a pay increase of no more than one per cent. Army generals, nurses and teachers will not be affected.<br /><br />A Tory spokesman last night said it was &ldquo;surprising&rdquo; that the Treasury would choose to make the announcement in the middle of the opposition&rsquo;s party conference, saying that &ldquo;people will question its motives&rdquo;.<br /><br />Meanwhile, London Mayor Boris Johnson said yesterday that he plans to slash &pound;5bn from his budget.