NEWSMAKER: The social statesman - Will Hutton, Chief executive, The Work Foundation

Mathew Little

Would you like some chewing gum?" Will Hutton ventures as I enter his office. Trend-spotters please note. At the Work Foundation, acme of the latest management styles, tea and biscuits are distinctly last century.

Aside from the Wrigley's, Hutton, arguably the UK's most important social thinker of the past decade and whose stakeholder society concept was New Labour's defining motif, has been chewing over the role of the third sector in delivering public services.

He co-authored a recent Acevo book, Replacing the State?, which argued that voluntary organisations should challenge the state's public service monopoly.

It's an idea that shows every sign of becoming the next big thing. Alan Milburn, the man charged with developing ideas for Labour's manifesto, has tellingly endorsed Acevo's call for a voluntary finance initiative that would guarantee charities contracts of between 10 and 25 years. The bookies' favourite for next PM, Gordon Brown, has allocated £125m to help charities get ready for a public service role.

Hutton, a critical friend of the Labour government, has also joined the chorus. We are moving, he says, towards a "network society" in which it will no longer be tenable for organisations to be sealed off from each other and other sectors of the economy.

"In the 21st century, all organisations are going to become more porous and more networked," Hutton predicts. "It's true for the public sector and it's true for the voluntary sector. Where organisations have got compatability of values and interests, they must be able to broker mutually advantageous deals."

The third sector, he suggests, could be an ideal partner for the public sector because its values are far closer than those of private companies.

VFI could succeed where PFI has caused disquiet and controversy.

Nonetheless there are sceptics. And not just those on the left whom Hutton disparages for obdurately defending universal state provision. Privately, some charities think a voluntary finance initiative could be a step too far. Public sector partnerships have not always been an unalloyed blessing.

Full cost recovery, though accepted by central government, has not gone top of the 'must-do' list of every local authority. Shelter boss Adam Sampson warned this month that the sector should decidedly not replace the state - "we're not here to enable a smaller state and lower taxes."

Hutton recommends a hard-headed approach. "Both sides will have to go cautiously. But I don't see this as a recipe for the third sector being ripped off by the public sector. If the relationship is going to be asymmetric and unfair I wouldn't recommend it," he says.

"If a voluntary organisation can't cut a deal with a local authority because it doesn't believe in full-cost recovery, don't do it. From the other viewpoint, if you believe that third sector delivery is going to be poor, don't do it. But if we are going to give diversity of income streams to third sector organisations, here is a way out of the box...

As for the public sector, there are huge risks in the status quo. Is the status quo so unimpeachably brilliant that you can rest there? I don't think anyone is seriously suggesting that."

But it is not just New Labour that sees the partnership potential of the voluntary sector in social policy. Michael Howard used his first speech as the new Conservative leader to affirm his party's commitment to "compassionate conservatism", the creed developed by George Bush's Republicans, which envisages using the not-for-profit sector - and especially faith groups - to tackle poverty and deprivation.

Hutton's latest book, The World We're In, is an attack on the American way and US republicanism, and he sees a vital distinction between involving the third sector in public service delivery and the moral agenda of compassionate conservatism.

"It is not about remoralising the poor in any sense. Nor do I think there is a bias towards faith-based initiatives," he says. "The reason why the Tories got tonked in 1997 and 2001 is that they tried to be a variant of the Republican Party. It didn't wash. You try telling the Brits that the best thing the poor can have is a bible."

The border between the voluntary sector and private sector may be becoming more porous, but Hutton is no proselytiser for the charitable role of companies. Corporate social responsibility has now become de rigueur for most brand-aware companies. Yet at the same time, company donations to charity have stagnated. Hutton is a sceptic and would like to keep things separate.

"I think the business of business is business," he says. "What we want from the business sector is not that it gives £50,000 out of every £20m of profit to supporting 'good causes', driven wholly by what will help its image. We want our companies to do business honourably, to treat their workers decently, not to sell shoddy goods and to want to build long-term relationships with the people who invest in them. It shouldn't be 'bloody hell - we're in some difficulty with our image, let's do some high-profile stuff that will make the public think better of us'. I think the public are cynical about that and quite rightly so."

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