The move was hailed as "the beginning of the end of the traditional civil service" by Graham Mather, president of the European Policy Forum. It called for the move in a pamphlet last year and it was in a speech to the forum that the Chancellor of the Exchequer first trailed the idea in February
Mr Mather said the Government should now go further and put chunks of policy advice - the most sacred part of the civil service turf - out to tender. "The idea that there is a special science of public administration is out-of-date," he said, adding that the Government could start with tax policy.
Although it is a pilot scheme which will be monitored, Treasury sources said it had a read-out across the rest of Whitehall, presaging further changes in other departments.
Mr Clarke is understood to have only achieved his way after a fierce Whitehall battle with the Lord Chancellor's Department and other government departments and after finally insisting that the Finance Bill, which implements the Budget, was his Bill and he was determined to act.
Four private sector contracts have been let to two firms of solicitors, a barristers' chamber and a former parliamentary draftswoman who now works as a freelance.