Not now, I'm having a big idea

If the employees of one of Britain's most influential think tanks are stressed during the lead-up to the general election, they're not showing it. In fact, the only clue that an election is even taking place is a bright orange Post-it note stuck beside 5 May on the office calendar saying, simply, "Election". Beside it, another equally bright note states "Education report in".

Were it not for this understated calendar entry, one could be forgiven for thinking that one had walked into the offices of an advertising agency. Healthy-looking twentysomethings sip lattes, upload tracks to iPods, or swan about the large, uncluttered room. But think tanks don't design strategies for selling underarm deodorant or the latest trainers. They talk to people who run the country. On an average day in the new London Bridge offices of Demos, the centre-left think tank that surged to prominence at the dawning of New Labour, I am here to find out where and when and how all this cogitating actually happens. Do they have signs saying, "Quiet - thinking in process"? Do the older thinkers have more furrowed brows? Does this think tank have a fish tank?

Alison Harvie, a Demos manager, starts me off with a tour. She shows me how the "thinkers" sit in pods of neutrally coloured desks - roughly six to a pod - in a strictly anti-hierarchical structure. As with everything at Demos, someone has spent a little time thinking about it. Alison explains how the new space works: "We spread senior staff around so that there's one on each desk - an intern might be sitting next to the director, who might be sitting next to the database manager."

The arrangement certainly has a liberating effect. Wide, open rooms with unstuffy furniture have fostered a degree of creativity, and it is not unusual to see people sitting in corners, thinking. Or at least, that's what it looked like they were doing. It's sometimes hard to tell. Charlie Leadbeater, who has been associated with Demos since its inception, concurs: "Space can help, but what's really important is that people have something to talk about." And what sustains that discussion is a constant influx of new people. While this is all very cosy and egalitarian, I am still no closer to finding out how these bright young things actually earn a wage.

And if that's difficult to pin down, it's even harder to work out who is putting up the money in the first place. The think tank has deliberately avoided receiving funding from any political parties, relying instead on a complex array of financial sources. Individual projects are paid for either by a non-departmental public body(NDPB) such as the Heritage Lottery Fund; a corporate sponsor such as Microsoft; or a not-for-profit organisation such as Scope. Demos's 2004 project, "On the Future of Organisations", for example, was financed entirely by the mobile-phone company Orange. James Wilsden, Demos's head of strategy, says that this policy preserves the think tank's independence: "At any one time, we have over 20 funders. We're deliberately not dependent on any one funding stream."

I decide to ask Tom Bentley, the director of Demos, what his staff do all day. Now 31, in his early twenties he had already written books on educational policy and been a special adviser to David Blunkett, then Secretary of State for Education, before returning to direct Demos at the ripe old age of 26. But, for all his intellectual clout, he is disarmingly friendly. "The thing that most people do here is talk to each other," he says, engaging me through what I will later recognise as Demos-issue brainiac specs. "But a lot of them are writing, or e-mailing. So this place is also a hub for more far-flung activities."

Activity in a think tank seems something of a contradiction in terms, and a look around at the languishing figures who populate the office does nothing to disprove that. But Bentley has been anxious to establish Demos as a "do tank" as well as a cogitative environment. Demos employees, Bentley tells me, are often sent out into the community to assist with implementing policy or finding new ways to help other people think about policy. This core value of the think tank is one that Bentley acquired during his time with Blunkett. "I learnt that the ideas you bring can make a difference, that there is a contest of ideas," he enthuses. "But I also learnt how difficult it is to get policy to work. Forming a policy on something is not the same as having a strategy to make it work across the country. The details of implementation are just as important as the content of the ideas."

Demos employees aren't, then, secretly plotting a path to a third and fourth term for the Labour government, as I had expected them to be. Indeed, a closer look at the office provides ample evidence that the director's practical approach has been taken on board. Even as sandwiches and Diet Cokes are being laid out for lunch on the kitchen table, I still have to drag the fast-talking head of development, Sophia Parker, from her computer screen. She tells me about how she has been working with schools and Local Education Authorities to develop future education policies, and she is effervescent on the subject of "Personalised Learning". This hardly sounds like the stuff with which elections are won, but imagine if, when a party promised to make sweeping changes, they actually did it. Sophia's aim is to bring one specific area of policy to fruition, as she explains: "Our work here isn't about producing a pamphlet, but rather, connecting policy and practice in new ways."

Sophia's project sounds laudable, but the language she uses to talk about it is, at times, impenetrable. And she's not alone. Everywhere one looks at Demos, policy jargon stares back. It covers the walls in big slogans, and it litters the text of Demos publications. It is, too, the accepted style of speech among the think-tankers. I wonder whether it is entirely necessary. "There's definitely a danger of swallowing your own exhaust," responds Shelagh Wright, a sparky education expert, "but we're very conscious of it. There's no point, however, in being over-simplistic about things. You have to make sense of the interrelatedness of issues. We'd still like to make the language manageable, though."

Sophia goes on to explain that "it's not a challenge communicating to people who work in the sectors we deal with every day. It's people on the outside, people like you, who find it difficult". Since this is an argument that has been put forward since the first day of New Labour's stint in government, it is at least refreshing to hear people discussing it seriously.

It has been this willingness to discuss their own agenda that has contributed to Demos's meteoric 12-year rise. But this success has led other think tanks and areas of the media to consider Demos as little more than a back office or engine room for the New Labour machine. But, while Demos is aware of its links with Blair, Milburn et al, it does not see itself exclusively in New Labour terms. "We're quite distinct," states Tom Bentley, with some defiance. "It was never the point of Demos to be the main provider of ideas to a modernising Labour government... We're always looking for politicians who might be interested in the same ideas as we are. We've held seminars on the future of Conservatism, we've published pamphlets by Lib Dem MPs, and so on." Independence, it seems, is the watchword, and I'm surprised to find evidence of party-neutral Demos employees.

So, what is the point? For whom are these people thinking? As the day pushes on, I begin to sense that my insistence on seeing "product" and "result", as well as being frustrating for my hosts, is rather missing the point of think-tanking. Everyone I meet in the office seems genuinely fascinated by ideas for their own sake, and discussions are started for no better reason than that they throw up a world of possibilities. What the think tank has become, I realise, is an environment in which ideas themselves are the currency; solid things that deserve our attention. As Paul Miller, a senior researcher, tells me: "I suppose I first became interested in think tanks when I picked up a book called Life After Politics, just after the 1997 elections, when I was still a student. It was the first time that I realised that I was just really into ideas. And Demos wasn't just about argument and position... it was just people being interested in thinking."

This willingness to invite new ideas is never more evident than at the think-tank's evening conference. As worthies and experts arrive to discuss the relationship between the media and the Government, wine is uncorked and nibbles passed around. The Demos employees finish what they are doing and chat easily with the visiting intellectuals. Many of those who arrive, I later find out, are Demos associates, a 50-strong group of freelance "thinkers" from a range of different fields. One associate, Jake Chapman, who is dressed all in black like a French existentialist, tells me why the associates are so important. "All these young people," he sighs, "I'm twice their age. They've got the energy and enthusiasm, but I've got the wisdom. You can be as smart as you like, but you can't shortcut the experience."

And what an experience: bored and disillusioned with being a research physicist at Cambridge (isn't everyone?), he became Professor of Energy Systems at the Open University, a post he held for 31 years. Towards the end of his time at the OU, he was brought to Whitehall to expound his theories on energy systems, a way of looking at arguments "holistically not reductively, of bringing in other arguments, rather than breaking every argument down to its simplest form". (The irony of my asking him to explain the theory to me in layman's terms does not pass Chapman by.)

Associates such as Jake, while only in the office every two or three weeks, are integral to the think tank, and you can see their influence rubbing off on younger colleagues. Paul Miller has certainly caught on to Jake's world view, as he explains: "I really buy into this cross-fertilisation of different ideas. For instance, during my research for a pamphlet on disability, I took an idea from a history-of-science study that was all about providing the right environment for real creativity and debate."

Paul, who is also responsible for Demos's presence on the internet, takes me over to his laptop to show me the ways in which this willingness to "cross-fertilise" has impacted on the think tank's global reach. "The internet's not just about getting the Demos message out, it's about getting the message in," he says. To achieve this goal, there is an active Demos blog, which receives around 1,000 hits a day, and, due to an Open Access Licence, anyone in the world can download a Demos pamphlet for free, and even republish it in a modified form if they wish. These are radical ways of approaching intellectual property, and they are attracting more and more people to the discussions in which Demos is engaged.

It is exactly this kind of reach that attracts the brightest young graduates to knock on Demos's door. It is hard to imagine what a young intern's first day must be like, surrounded by all this talent. Kirsten Bound, a recent recruit and, like many here, a social-sciences graduate, tells me: "There's definitely scope for getting an inferiority complex when you work here. You're thrown in at the deep end."

After a day here, I know how that feels. But the think tank is not, as I had expected, an enclosed environment with direct links to No 10. The think-tankers say that they are "a greenhouse for new ideas that can improve the quality of our lives", and, like a greenhouse, they are largely transparent. Watching them juggling with ideas is an education in itself. As I shut the door behind me, I can hear them still chattering away.