The letter to Jonathan Aitken, the Chief Secretary to the Treasury, effectively overrules the judgement of Peter Levene, head of the Government's efficiency unit, that the taxpayer was getting a good deal from the public management of the Principal Civil Service Pension Scheme (PCSPS).
'It is quite usual for companies to contract out the administration of their own pension schemes. I appreciate that the PCSPS has unique features. So far as my department is concerned, I intend to explore contracting out as soon as we are in a position to do so,' Mr Heseltine wrote.
The leaking of the letter to leaders of civil service unions will infuriate ministers. It provoked an outcry last night from the unions, already angry over deep long-term cuts in their numbers and braced for the announcement of more cuts in Treasury staffing today.
But Michael Howard, the Home Secretary, in another leaked letter to the Treasury, appeared to be at odds with Mr Heseltine. Mr Howard supported in-house bids by other Government departments to run the pension funds.
Civil service leaders last night called on John Major to consult before going ahead with the announcement today of cuts in senior civil servants at the Treasury.
Elizabeth Symons, general secretary of the First Division Association, said: 'The senior civil service is a rich resource, not just of one government, but one which should be passed from government to government.'
A protest rally of senior civil servants in London yesterday was told that the Civil Service White Paper published by William Waldegrave this year could lead to the loss of between 12,000 and 25,000 jobs over three years.Reuse content