If there's going to be disagreement, it's good to figure out where, why and how it arises. But when it comes to religion and public life, there is more frequently unhelpful confusion. Here is Francis Davis, one of the authors of the new church, government and welfare report Moral, But No Compass (now styled as the 'lead author') writing about it in the Jesuit online journal, Thinking Faith - 'A challenge to every politician' . On the other hand, Andrew Copson of the British Humanist Association is decidely less than impressed  - though he seems to be responding to remarks about the reporting rather than the document itself.
I agree with Andrew's point about disestablishment, bishops in the Lords and the ill-adjusted constitutional place of the the Church in a modern democratic state. But I also agree with Francis that the scale of church (not just Anglican) involvement in community service is much larger than is usually recognised and has important implications for the future of welfare policy which cannot simply be dismissed.
What happens, it seems to me, is that pro-Established Church advocates mistake the size and scope of Christian voluntary effort for some kind of automatic vindication of a formal ecclesiastical stake in statutory welfare provision -- as if advocacy, social entrepreneurship, community service, social projects and the contracting out (or 'commissioning') of government services under a 'best value and compact' regime, or regional variants, can simply be run together (the last one being the elephant sneaking in at the back of the room, so to speak).
Likewise, secular critics of the church's privileged position usually fail to realise that while the institutions of historic Christianity and its codes of belief may be declining, and while the case for ending the formal link between church and state is strong (theologically, as well as in terms of pluralism), the churches continue to encompass a sizable body of regularly active people -- around 2 million in all, and house some of the largest and widest range of charitable projects and social initiatives in the country. Faith is not disappearing, it is morphing, re-locating and changing, both within and beyond the inherited structures.
So the key issue remains, 'what kind of Christian involvement should there be in the public square?' Ekklesia has argued for a much more radical , less 'functionalist' or 'reactive' approach from Christians. This would be one based on creativity rather than control, on ground-up investment in alternative models of wellbeing, reconciliation and social justice, rather than gradual absorption into the current 'delivery' culture.
On specifically Christian grounds, we have opposed particular privileges for church people (for example, the ability to select and employ according to faith affiliation in publicly funded schools). We have urged the churches to grasp the comprehensive equalities agenda fully in public life, again from a theological starting point. We have also sent out a series of warning signals about the emerging 'new deal'  between religious and state interests -- of which what is being discussed here  may or may not be the latest example (you can read it in a number  of ways).
The point of this is not to recommend isolationism or a 'prophetic stance' disconnected from a proper understanding of the shape and limits of the environment we live in, but to recall the Christian community to a renewed sense of its primary vocation as an exemplary agent of change rather than a collusive cementer of the social order.
Moreover, a confrontation between one group of people seen to be trying to grab a bigger slice of the 'public service' cake for organised religion, versus another wanting to exclude communities of faith from civic life altogether (which isn't where the BHA is coming from, incidentally), misses the real opportunity.
This opportunity resides in the need to question, practically and morally, the top-down 'welfare agenda' being developed by both parties (albeit with different patterns and assumptions); to challenge the churches to find better ways of practicing what they preach in terms of equality, justice and human rights/responsibilities; and to renew a radical civic-based tradition that brings together people from different backgrounds and world views to develop a grassroots vision of active social justice.
Meanwhile, aside from its rather sensationalist introduction in the media, the Von Hugel Institute's report is a substantial contribution to the debate, and provides plenty of fresh evidential material. Hopefully the rush to judgement which is so common in public life these days will not obscure the important detail and the full depth of the wider picture it seeks to present - whether we agree with its conclusions and emphases, or not.
(c) Simon Barrow is co-director of Ekklesia. He blogs at http://faithinsociety.blogspot.com  and his website is at http://www.simonbarrow.net . Having worked as an adviser and trainer on church-community projects, Simon contributed a chapter entitled 'A friend in deed? the church's caring role', on pastoral work, advocacy, community development and civic engagement, to (ed.) Michael Simmons, Street Credo: churches and communities (Lemos and Crane, 2001). In 1995 he edited and contributed to Expanding Horizons: learning to be the church in the world (Southwark Board for Church and Society).