Geoff and Martin's big idea: These men think they'll change how we think. One is a former Communist and a newspaper columnist. The other is a 30-year-old public school drop-out who taught himself into Oxford

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After months of preparation, including supper in an Islington restaurant, they are launching Demos - a modern, cross-party version of that old, odd institution, the think-tank. They have an office, funds and the blessing of some eminent names, but does it matter what they think?

POLITICS has never been so boring. Communism is dead, everyone now agrees that markets matter; political parties are left scuffling half-heartedly over the centre ground. Occasionally there is talk of a new Big Idea, something that might make politics interesting again; but wherever you look, imaginations are evidently failing, and even the sharpest minds seem to be trying to cut through blancmange.

Think-tanks used to be where people went for Big Ideas: it was think-tanks such as the Adam Smith Institute and the Centre for Policy Studies that honed and propagated Thatcherite ideology. But the new consensus means that think-tanks of right and left (the directors of the two newest outfits, the leftish Institute for Public Policy Research and the rightish European Policy Forum, often appear on platforms together) are now converging, as they seek to influence the Major-Smith middle. There might be a bit more emphasis on Europ-

eanism here, a bit more enthusiasm for proportional representation there, but the ability to shock and disturb is little more than a memory. Looks like the end of history after all.

This is troubling for lifelong radicals. What do you do, for example, if you are Martin Jacques, former editor of Marxism Today and the most prominent British Communist of your generation? No Communism left for you to attack from within; no new radical right-wing ideas for you to embrace, and so dismay and outrage the Labour Party. The Government's ineptitude and Labour's paralysis are too soft to be satisfying targets, anyway, and everyone else is attacking them already. You can become a columnist and write articles about how boring men's clothes are for the Sunday Times (which he does), but it still leaves a hole.

What you do, in fact, is found your own think-tank: get some friends and advisers together and organise yourselves to influence public debate. In a few weeks' time, a new think-tank, Demos, will be launched (Demos is Greek for people; the name came courtesy of adman Barry Delaney, after months of agonising by Jacques and friends). Jacques will be its chairman; his old friend Geoff Mulgan, who until recently worked on policy formulation for Gordon Brown, its director; and another old Marxism Today friend, Stuart Hall, a professor at the Open University, will be on the advisory council. Its ambition is to cut across old party allegiances - thus council members also include Sir Douglas Hague, a former economic adviser to Margaret Thatcher and a member of her Downing Street Policy Unit; Anita Roddick of The Body Shop; Martin Taylor, chief executive of Courtaulds Textiles; and Gerald Holtham, senior international economist with Lehman Brothers. Arthur Seldon, founder president of the oldest and grandest free-market think-tank, the Institute of Economic Affairs, is an informal adviser.

Demos will, its promotional literature tells us, 'be a catalyst for a different, less ideological politics. It will draw on the most advanced thinking from throughout society and across the world. It will seek to inject a new vitality into the political world.' Ah, but think-tanks have always specialised in grandiose claims.

MARTIN JACQUES joined the Communist Party in 1961 when he was 15, a Coventry grammar school boy and, at first, a true believer. He became, over time, a sceptic and an irritant, influenced by the writings of Antonio Gramsci and committed to moving the party towards Eurocommunism. He stayed into the Eighties 'really only because of Marxism Today', and when he finally left the party in 1991, he had just discovered the Soviet Union had been paying the bills all the time, meaning his efforts at modernisation had been a waste of time.

When he was offered the editorship of Marxism Today - at 40 per cent of his then salary - he'd been lecturing in economic and social history at Bristol University for 10 years. Under his energetic stewardship, the magazine grew from an academic journal of Communism to become (to quote Fay Weldon, in admittedly effusive mode) 'the last repository of thought'. It coined the term Thatcherism and Chris Patten said it 'treated politics as an adventure for serious grown-ups'.

When Jacques first thought of Demos, a year or so before Marxism Today closed in January 1992, it was as an extension of the magazine but without the constraints of monthly publication. 'The original idea was simple: right-wing think-tanks had been very successful as intellectual outriders for Thatcherism, bringing together different groups of people, and I thought we needed something like that - 'we' being, at that time, the people most closely involved with MT. I suppose I thought we would want to go on thinking about individualism and collectivism, globalisation and the nation-state, all those things we were working on already.'

There was, in fact, already a newish think- tank on the left: the Institute of Public Policy Research, founded in 1988 to do for Labour what other think-tanks had done for the Tories - provide a Big Idea and propel the party through a decade. But Jacques always believed Demos must be different: 'IPPR was created by Kinnock's office, and that colours all its work. It's not true it doesn't do good things, but there's this dead weight: it's overseen in various ways. More fundamentally, the Labour Party has no sense of intellectual energy, drive, creativity; it's too constrained and predictable. It was always obvious that we would have to be more promiscuous.'

In fact, Demos got seriously sidetracked by Labourism in its early, hanging-around phase last spring and summer. Jacques was preoccupied with trying to raise money for a new magazine with a less silly name than Marxism Today, and the man who was to become Demos's director, Geoff Mulgan, was tied up Thinking for Gordon Brown. So Jacques started a series of informal, irregular meetings in wine bars and at people's houses, drawing in friends and contacts - many of whom, inevitably, had strong links with the Labour Party.

Divisions about what Demos should stand for came to a head during the run-up to a fund- raising dinner last September at Frederick's, a restaurant in Islington, north London, traditional Labour territory. 'I saw what Labour Party sectarianism could be like, and realised I had to get rid of all the undergrowth that had accumulated,' Jacques says. 'We had stupid disagreements about whom to invite - 'We're not having them, they're on the wrong wing of the Labour Party', when Demos was supposed to be the exact opposite of all that. Eventually we had about 95 people there, from business, the City, advertising, journalism, academia, education, and probably the majority weren't in any political organisation at all. But it was still a long way short of what I thought we ought to be.'

Bob Tyrrell, managing director of the Henley Centre, the forecasting and social research consultancy, and now a member of the 16- member Demos advisory council, certainly had reservations: 'A number of people at the Frederick's dinner were old-school Labour; I had the sense that they were checking out whether it was a good social scene, or something they had to worry about. Too many people hang around the fringes of politics for ego reasons, power reasons, and some of them were there. It was also still too left-wing. It's important that Demos should be seen as neither left nor right, nor too traditionally political, with people drawn from all walks of life.'

The man who will determine, more than anyone else, what Demos becomes, and how it is perceived, is Geoff Mulgan. 'I knew from the outset,' said Jacques, 'that Geoff had to be the director, that he was the one person who could give it the necessary intellectual drive: the thing about Geoff is, when you ask him a question, you never know quite what answer you'll get: he's not encumbered by ideology from the past.

'So I took him out for a walk in Finsbury Park and put it to him.' Mulgan was still, on that afternoon two years ago, much preoccupied with Gordon Brown and the shadow ministry for Trade and Industry: 'I thought Labour might win the election, I'd been in the Labour Party for a long time, and I wanted to be in government: it seemed a great opportunity for shaping an industrial strategy for Britain.' But Labour lost. It must have been disappointing not to become the man behind Britain's industrial regeneration, but he turned Labour's election defeat to some advantage by becoming the Clinton campaign's link to Labour, which involved lots of telephone calls with the Americans - 'mainly advising them how not to repeat our mistakes'.

Had Labour won the election, Demos may not have got much beyond a tasty lamb dinner and a few earnest breakfast meetings of interested friends and contacts. It would certainly not be launching now. Defeat crystallised a dissatisfaction bordering on despair over Labour as a means of changing anything and, in Mulgan's case, freed him up to work full-time for Demos.

Mulgan is 30 and looks younger. Though deadly serious about what Bill Clinton and friends call 'policy wonking' and others call solving the problems of the world, he often breaks off to chuckle, and utters the occasional Big Phrase in ironic capital letters.

He grew up in London, got thrown out of public school (Westminster: he won't say whether for drugs or politics - 'a bit of both,' he mutters vaguely), and taught himself for A- levels and Oxford entrance. After a PPE first at Balliol, he joined the GLC in the heady days immediately before abolition, then went to the Massachusetts Institute of Technology to study telecommunications and communications technology - 'I didn't know anything about it and it Seemed Important. Most of education in Britain is backward-looking, and MIT is at home in the future.'

Returning to London, he became 'a polytechnic lecturer, the lowest form of human life', teaching media and telecommunications at Central London Poly. During his MIT stint he had published, with Ken Worpole, Saturday Night Or Sunday Morning, an analysis of British arts policy back to the 19th century which was much quoted in the Government's recent National Arts and Media Strategy. He followed up with Communication and Control, about how technology has changed economics, and Politics in an Anti-Political Age, published next October, which addresses the questions that now obsess Demos - which are, he explained in his office: 'What is the role of politics when people have turned away from politics, when the old dreams have gone cold, and the biggest political issues - the environment, the sexual revolution - have happened despite, not because of politicians? Politics has gone elsewhere; yet the demands on political systems to solve problems are as great as ever.'

His own political development reflects something of what Demos might come to stand for. 'I was an activist on the left, then influenced by the radical, slightly mad creativity of the GLC, and involvement with high technology, which gives you quite a different perspective on 19th-century ideologies. Most people trying to reform politics are still working within divisions which were appropriate a century ago.' As an example of a 21st-century division, he suggests the dispute over whether students should use computers to learn at their own pace rather than sitting in rows to be taught a standardised curriculum at a standardised speed.

'This is already happening up to a point in universities - why have a second-rate lecturer when you could have the best professors? But it's also applicable to secondary schools, and potentially revolutionises our ideas of what a school is, what a teacher is. The institutions which provide education have resisted these ideas: for obvious reasons, they will do their utmost to stamp them out, to go further towards standardising education through things like the national curriculum, to prevent the users of education from gaining control of it.' Given his own less than blissful relationship with school, it is easy to see why this is attractive. 'I may be entirely in agreement with someone on the far right about that - or with someone in the centre. One of the reasons the other think-tanks are bankrupt is that new divides are now more significant than the left- right divide - for example, between those who believe in group identity, and look to nation, religion, city, race, and those who believe in universal values. You can see that split very clearly in the Tory party, between those who look for open world capitalism and those who want to be British.

'Or, take the idea that governments should solve problems on behalf of people, which is deeply embedded in the left-wing brain: it's absurd when you take into account information technology, which increasingly empowers people to help themselves. Business has been much quicker here: the dominant concern of innovative companies now is how to pass down power and responsibility.' One politician with what Mulgan would call a left-wing brain responds tartly that this leaves out a large group of people - 'call them the unemployed, the underclass - who don't feel anywhere near being empowered by information technology.'

Despite a natural shyness, Mulgan appears to be an effective operator. He is responsible for raising the pounds 100,000 core funding from business that Demos needed to launch. Core sponsors, who, like think-tank sponsors generally, tend to remain anonymous, include two manufacturing companies, a big retailer, an advertising company, a media organisation, a service company, and a trade union.

'Er, no, no flip charts,' he says, 'no formal presentations. It's just about talking to people, chairmen and chief executives. The trick is to find something that relates to them personally. But in a way we've been pushing on an open door: most business people feel disillusioned with politics, and if they're funding other think-tanks, they feel they're not getting value for money.'

Dennis Stevenson, a director of SRU and Pearson plc, chairman of the Tate Gallery, and compulsive enthusiast, who has joined the Demos advisory council, first met Mulgan 'when I was giving a talk to the Council on Foreign Relations in New York. They're very high-powered, I'm very busy, and I wanted some help. Somebody pointed me in Geoff's direction - he was still working for Gordon Brown then, as his researcher - and he was wholly wonderful, incredibly widely read. I'm a great pessimist about America, and I wanted to tell all these republicans and Wall Street types that unless something changes soon, they're heading for some ghastly social breakup. Anyway, he'd read all the interesting books, books by French people on America, and he came up with new thoughts, interesting angles.'

MULGAN will need all the angles he can get. It's one thing to collect a disparate group of people from diverse disciplines and pump them full of enthusiasm; driving them forward along a common path is another matter entirely. Sir Douglas Hague, Stuart Hall, Anita Roddick and Martin Taylor are all radicals in their own way - but it isn't the same way. One pre-launch discussion group on alternatives to Maastricht has already folded because its participants were unable to agree. History, meanwhile, suggests all the great think-tanks of the past were founded to proselytise as much as to think. The Institute of Economic Affairs, with whose long-term perspective Demos would probably most closely identify, was set up quite specifically to evangelise for the economic liberalism of FA Hayek. This made it very easy, not merely for the think-tankers to move forward, but also for observers to understand what it was all about.

Demos is bound to be misunderstood. 'Friends of mine think Martin Jacques is still a Communist,' grumbles Arthur Seldon, 'but then, no doubt, some of his friends see me as an extremist libertarian.' The tribalism of British politics, the very thing from which Demos is trying to struggle free, will militate against understanding. Some observers will dismiss Demos as an extension of the Marxism Today left; others as proof positive that Martin Jacques has become a Tory. 'The political professionals will try to pigeonhole us,' acknowledges Mulgan: 'and anything which isn't tribal in British politics sounds either like the SDP, or else you don't know what it is. It will be easier once we start producing papers and people can see what we're about.'

But how much easier? The range of Demos's interests is eclectic (not many think-tanks do projects on parks, for example), and its audiences correspondingly various. Mulgan hopes politicians of all parties will fall on Demos's ideas, 'because they'd rather do that than have to oppose them'; but they may well be extremely hostile, given the premise that parties of all hues are failing. 'Where do the most innovative ideas about ethics or how to run organisations come from?' demands Mulgan. 'Maybe from a management consultancy, or a multinational, a laboratory, a small inner-city project, a green campaigning group; anywhere but politicians.' But the very diffuseness which Demos sees as a strength could equally be a weakness, meaning nobody quite thinks it's about them.

Mulgan is aware of all this, and believes a sense of what Demos stands for will become increasingly obvious. This he calls 'democratic radicalism,' which he defines as: 'a democratising, anti-statist spirit, sceptical of government, business-literate, economics-literate, instinctively sceptical about old things, like the House of Lords or the Royal Family - and a little bit populist as well: I would expect quite a lot of our stuff to be reported in the Daily Mail, and probably the Sun as well. At the moment debates about policy are only ever conducted within self-selecting circles who all read the same newspapers - yet many of the ruling groups in Britain have failed: the Treasury, banks, a whole range of institutions.'

Demos will be setting up little thinking groups, seminars, distributing discussion documents and publishing pamphlets. It is planning an occasional series of public events, featuring what Mulgan calls The Thirty Most Interesting People in the World. (These turn out to be all completely obscure.)

One early paper, says Mulgan, will focus on the many demands made of politicians. They are expected to represent a constituency; be in a pool from which ministers are chosen; oversee government work and be expert legislators. 'In practice,' says Mulgan, 'they do none of these things well. They are just lobby fodder or good at answering questions on the news.'

So Demos will look at ways of improving politicians' performance. 'Attacking the professionalisation of politics might be one way, so that people would have to achieve something outside before going to Parliament. Thinking about how ministers are selected might be another: most ministers don't come from parliament in France and America. Or there's limiting the time they serve, orstructures for policy formulation - the whole field.'

Despite Demos's stated intention to publish 'less but better' than other think-tanks, five pamphlets are planned for the first few months. The first will look at tax. Starting from the assumption that taxes should be in tune with popular ethics, 'you quickly come to the conclusion that income tax and corporation tax don't meet any of the criteria for a good tax system: they penalise people for working hard, and the burden on the middle is constantly increasing, with people at the top getting out through avoidance schemes, and at the bottom because of rising long-term unemployment. 'What we're saying is that it's no longer acceptable that tax should just go into a central pool and be sloshed out by a bunch of mandarins. You have to link tax much more closely to spending. So you could ask at a general election whether people want health spending to rise, for example: it might be that a lot of people want to vote Conservative yet see more money spent on health, but they're not given that choice at the moment.'

Further pamphlets will include at least one on public spending - 'looking at how to keep in check megalomaniac bureaucrats'; another on radical alternatives in education; and one on ethics and health. 'Government health reforms are moving decisions about priorities towards users - yet there's been very little public debate about how we might set priorities: how much care should an Aids patient get? Should we support those who have inflicted damage on themselves as much as those who have suffered accidents? Should cosmetic surgery be provided on the NHS?'

Demos is not designed to become famous (although Jacques will be more than happy to be famous as a columnist); its members expect, rather as the IEA did before, that most of their ideas will need five to ten years to become mainstream and longer to affect people's lives. And they aren't a lobbying group in the true sense of hanging around pestering MPs. Rather arrogantly, they will shoot their ideas into the ether and assume those responsible for getting things done will pick them up excitedly.

Well, they may, although hostility is inevitable, simply because the Demos people have set themselves up as know-alls. Several of the advisory council - some of whom are still quite uncertain about what is being worked on at head office -say that Demos will stand or fall by its ideas: positive, practical ideas, rather than the critique of current miseries that Jacques specialised in at Marxism Today.

GRAHAM MATHER, former director of the IEA and founder of the European Policy Forum, says think-tanks can no longer be run as informal clubs. 'You need someone in the office constantly to return press calls, to support donors; you need technology for your mailing list. An absolute bargain basement think-tank needs pounds 100,000 a year, and probably twice that.' The IPPR receives core funding of pounds 300,000 a year, and project funding of pounds 150,000.

In the light of this, Demos looks a desperately fragile enterprise. Mulgan's 'administrative empire' - himself and an assistant - is currently housed in a spartan but still claustrophobic 10ft-square room in Vigilant House, Victoria. There is only just space for the couple of desks and computers and a handful of books, with such titles as The Politics of Taxation and Future Worlds, and Reinventing Government by Osborne and Gaebler, an influential American work.

On top of the pounds 100,000 already pledged by business, Mulgan is looking to charitable trusts and individuals for pounds 30,000 to pounds 40,000 a year, plus pounds 80,000 for projects next year and the year after. The founding sponsors have pledged pounds 5,000 up front, and pounds 15,000 to pounds 20,000 a year subsequently - 'although they're not locked in: we'll have to prove we are worthwhile'.

This inevitably raises questions about whether Demos's long-term perspective will be immediately useful to business people. 'Well, they'll be part of a network; they'll be able to send their managers and executives to events. And there will be briefings: as well as publications carrying our logo, we'll produce papers for limited circulation.'

In Demos's favour is the strength of its advisory council, which includes, as well as those already mentioned, John Ashworth, director of the London School of Economics, who has worked for the Central Policy Review Staff and is chairman of the National Computing Centre; Chris Ham, professor of Health Policy at Birmingham and 'leading radical thinker on reform of health services,'; Ian Hargreaves, deputy editor of the Financial Times, and formerly head of News and Current Affairs at the BBC; David Marquand, professor of politics at Sheffield University and a senior Liberal Democrat; and Sue Richards, director at the Office of Public Management, formerly at the Cabinet Office. They include Tories and Liberal Democrats and, just as important in Demos's view, a number have never had much truck with party allegiance. They also have their director: 'Think-tank directors are born, not made,' Graham Mather says. 'They need both intellectual facility and networking skills; and Geoff Mulgan is one of them.'

It's clear that, in five to 10 years' time, Jacques and Mulgan would like to be able to say what Madsen Pirie said of the Adam Smith Institute in 1987: 'We propose things which people regard as on the edge of lunacy. The next thing you know, they're on the edge of policy.' What is less clear is whether they

see existing political structures as candidates for reform, or so severely limited that other ways must now be found of formulating and executing policy.

'All parties have a backwards feel, the smell of the past about them,' Mulgan says. 'But our aim is simply to start the debate. If they can't respond, they're probably going to collapse anyway. Obviously, we want our ideas to be implemented, and that means putting them compellingly, so politicians have to listen. But we're also trying to shift the political debate, so it isn't so compartmentalised. We'll know when we've succeeded, because people will talk about politics in a different way.' Jacques, meanwhile, suggests one final potential problem: 'We don't think it is, but it's always possible that our analysis is totally wrong.'

(Photographs and chart omitted)