A reading from the gospel according to Rowan Williams

The prospect of an avowedly liberal Archbishop of Canterbury succeeding George Carey has thrown the Anglican church into a spin. But those fearful of Rowan Williams's views on gays and women miss the point, says Paul Handley

You have to feel sorry for Rowan Williams. The man hasn't even been appointed Archbishop of Canterbury, but already his policies are being squabbled over. Anti-gay, conservative evangelicals responded to reports that his name had been put forward by getting their retaliation in first, threatening to split off from the Church of England if this liberal moves into Lambeth Palace. Perhaps the small but loud band of dissidents will pack its bags at the same time as George Carey, who leaves his post at the end of October.

The truth, however, is that gays are a long way down the list of problems waiting for Williams as the new leader of the argumentative Anglican flock. The possibility of women bishops is about halfway up that list, and money problems are near the top. But the biggest problem of all has tended to be ignored because the word is such a mouthful: disestablishment.

The knot tying the C of E and the state together is in danger of unravelling. This challenges the influence the church has had on politics, education, the law and the Crown since the start of the parliamentary system. The new Archbishop might not be able to stop it happening, but even if he could, should he try?

Williams is said to favour disestablishment, not least because he is Archbishop of the Church in Wales, which cut free of the state in 1920. Not surprisingly, he has praised the Welsh set-up; certainly, the business of appointing bishops goes much more smoothly there than in England. Nevertheless, he cannot be written off as a rampant republican. At a sermon before the Queen which he delivered a week ago, he spoke of the monarchy in a way that Charles I would have approved.

Disestablishment is about more than whether the C of E will go on letting No 10 choose its leader, but let's start there. The present system of appointing bishops and archbishops dates back to 1976, when James Callaghan agreed to formalise what had been an unofficial and often unorthodox process, in which the Prime Minister had an almost free hand. The Church scored a coup by persuading Callaghan to restrict his involvement to choosing between two names submitted to him by an appointments commission. The two names are selected by voting on a shortlist, and can be sent to the Prime Minister in order of preference.

Until now, the process has been secret, so there is no solid evidence of how successive Prime Ministers have behaved, but one can infer that, in general, they have played fair. Elements in the church still want the PM's involvement to be stopped. They argue that the knowledge the Archbishop has been chosen by Tony Blair will seriously undermine his authority.

However, if the Prime Minister really has chosen Williams then he's got someone whom the church wants – or ought to want. It is not hard to imagine the two men in a friendly, supportive, critical relationship; even people who disagree with Williams continue to like him. But the disestablishment debate is bigger even than these two personalities.

For many years most people in the church were happy for things to continue as they were, and could see no reason for anything to change; others had no interest in disestablishment at all. In the past year or two, though, the waters have been stirring.

First, just because the church's leadership tends to be a bit Tory does not mean the bulk of church-goers are immune to the shifts in the attitude of the nation. Of more than 5,000 readers polled by the Church Times last year, only 49 per cent wanted the monarch to remain head of the church; and a mere 5 per cent believed bishops should be appointed by the state.

The church's relationship with the state works like this: the Prime Minister chooses the bishops because they sit in the House of Lords. At present, there are 26 seats for the Lords spiritual. The PM, Lord Chancellor, Home Secretary, Culture Secretary and Speaker of the House of Commons are among the Church Commissioners, responsible for the management of its assets. Finally, all significant changes in the C of E must be made through legislation and passed by Parliament.

Now, however, the Prime Minister is touting the prospect of a reformed House of Lords with no bishops in it at all. The proposal is still sinking in for church-goers, but they are starting to ask what happens to a quid pro quo when you get no quo for your quid.

So what would disestablishment mean to the C of E? A significant drop in its status, perhaps. But those who do not fear this ask to be shown any gospel passage in which Jesus tells his disciples to pursue positions of power and influence. They argue, instead, that there would be no iconoclastic disintegration: church primary schools, mostly funded by the state, would continue to educate one-fifth of the nation's children; the church would continue to lobby pretty unsuccessfully for state aid for its listed buildings; and big national events would still be marked by services in St Paul's and Westminster Abbey.

To discover what might be lost, one has to look at ownership. One view of establishment is that it is not about privilege but service. The C of E is owned by the people of England: everyone lives in a parish, everyone can insist on their right to be baptised and married in the parish church.

There are, however, signs of disaffection with this arrangement: cathedrals that charge for entry, clerics who won't baptise your baby until you've watched an evangelistic video. These are in the minority, but how long they remain so if the deal at the heart of the church-state relationship disintegrates is anyone's guess.

But it is hard to imagine the thoughtful Rowan Williams wishing to hasten disestablishment if it means privatisation. Ultimately the decision may be out of his hands. Whether or not he has had a letter from Blair, the new Archbishop knows that the future of his church probably depends on a greater power: the will of the man who is offering him the job.

Paul Handley is editor of 'Church Times'

Rough guide to an archbishop

Age: 51.

Married: to Jane, a college lecturer.

Children: Rhiannon, 14, and Pip, 6.

Style: shaggy beard, hand-knitted sweaters, cassocks.

Personality: ferociously bright but approachable.

Education: grammar school in Swansea; divinity at Cambridge, then Oxford.

Career: deacon 1977, priested 1978. Lecturer and tutor at various theological colleges; dean and chaplain of Clare College, Cambridge; professor of divinity at Oxford at 36. Fellow of the British Academy 1990. Bishop of Monmouth 1992. Archbishop of Wales 2000.

Publications: more than a dozen academic works, commentaries and volumes of poetry. First was The Wound of Knowledge at 29; recent publications include Writing in the Dust: Reflections on 11 September and its Aftermath (2002).

Languages: can lecture in five.

Churchmanship: grew up Anglo-Catholic but regular speaker at events organised by other traditions.

Beliefs: liberal but orthodox. Thinks the resurrection happened. Supports women bishops and marrying divorcees in church. Believes homosexuality should not prevent ordination.

Politics: outspoken. Called for ethical foreign policy to tackle arms trade. Questioned bombing of Afghanistan and sanctions against Iraq.

Watches: The Simpsons, "one of the most subtle pieces of propaganda around in the cause of sense, humility and virtue"; and Father Ted: "it makes you think about the real zaniness of the Church".