Close-Up: Newsmaker - Why indie idealist Saville is a reluctant adman

The Factory Records founder and designer Peter Saville treads a fine line between commerce and culture.

If you saw the recent "illusions" Transport for London ad by M&C Saatchi without the voice-over, you would be forgiven for thinking that you'd stumbled upon a rerun of MTV Dance from the early 90s and were, in fact, watching a music video for The Orb.

The combination of moving optical illusions, trippy images and rough background noise definitely take a lot of their inspiration from the computer-generated music video graphics of that era.

Therefore, it should come as no surprise to people who know his work that the ad was directed by M&C's sometime artistic collaborator, the Factory Records founder and 30-year graphic-design veteran Peter Saville.

However, he instantly pours most of the credit on the people he worked with. In fact, he makes the whole situation, his first directing job proper, sound extremely simple. "It was easy really. All I had to do was interpret a good idea that the team here came up with. And the rest was down to one of my long-time collaborators, Marcus Werner Hed."

However, "easy" might not have been the word used by his co-workers because he is legendary for being late, whether meeting someone (he was 40 minutes late for this interview) or hitting deadlines.

Graham Fink, the executive creative director of M&C, says with an affectionate smile: "Luckily, we had three months to the deadline. However, we still almost didn't make it."

The two men then break into a discussion about some subtle nuances of the background sound on the final edit of the film. Indeed, Saville is a self-confessed perfectionist, and famously idealistic. Not surprisingly, his reputation for being unco-operative goes back many years.

He left Manchester Polytechnic in 1978 and, despite having worked with top brands such as Next and Selfridges, design agencies such as Pentagram and designers such as Yohji Yamamoto, describes himself as "out of synch with remunerated commerciality". Which makes you wonder how he manages to work with M&C Saatchi.

In fact, it's an ad hoc arrangement, which, in this case, means: "When Graham asks me to come in, I'll come in and suggest a way in which a Lucozade label could be placed better."

The "job", dating back to 2006, came about from a long-running friendship between the pair who, Saville says, met at CDP about 20 years ago. He admits to having always liked Fink, and says he has a huge appreciation for the way he has accepted the challenge to take the agency into a new era.

This leads Saville into one of several, 30-odd minute, mostly engaging, but complex discourses that he gives during the course of a two-and-a-half-hour interview. By the end of each peroration, you are in no doubt about what he thinks, and why he thinks it. Each one is overloaded with long pauses and exasperated sighs as he makes sure 30 years of experience are conveyed in just the right way.

His musings about his friend lead him down a darker path to some less-than-complimentary views about advertising and its role in the world, and it becomes clear why he has only skirted the industry over the years. "The TfL work was good to do because they didn't interfere too much. It's also public sector, so it didn't involve me selling something to somebody.

"The thing I get most frustrated about is the way that advertising, because of our converged, highly aware, informed social culture, is increasingly using the cultural canon to legitimise its messages.

"This annoys and upsets me because it suggests that the company from where this work comes from shares these values, which I don't believe they do. Sometimes it can be incredibly creative individual work, but it's from Orange or Sony, who are trying to sell someone something they don't need.

"The economic boom in the UK, which is broadly due to retail, is based on money that doesn't exist and I can't feel good about playing a part in this aspiration-driven version of Russian roulette."

This may seem like an unhealthy amount of scepticism for somebody who draws a salary (no matter how small he says it is) from an ad agency. But his views are easier to understand when seen in the context of Saville's extraordinary early career.

It all started at Factory, the Mancunian record company founded by the local TV personality Tony Wilson (who died last year) and a group of his friends. Before closing down in 1992, Factory launched three of the country's most famous bands (Joy Division, New Order and The Happy Mondays). It saw a lead singer commit suicide (Ian Curtis of Joy Division), and it changed the shape of Manchester and, subsequently, the city's place in the UK's popular culture forever.

Or as Saville likes to refer to it: "The last true story in pop. An Arthurian tale in the modern age."

The company, "if you can call it that", Saville says, was set up on the premise that everybody owned it, and all the money was ploughed straight back into the business. "There were no compromises and everybody did exactly what they wanted to," Saville says tellingly.

This led to decisions being made that were unheard of before in the music business: Joy Division, and subsequently New Order, never put singles on albums; the record label bought a nightclub (the now world-famous Hacienda) and sold drinks to punters at cost.

"We didn't even have a proper office. We had thousands of pounds coming into Rob Gretton's house, but didn't know what to do with it, so we put it under his bed," he says.

"It could never work in this day and age. Tony always maintained his day job, thereby never accepting the full responsibility of a business.

"The downside was that its potential as an ongoing interest was compromised. But because the venture never came to terms with the notion of commercial viability, it never became part of the establishment. It became part of a legend," he says. "But when you're young and going through it, you don't realise that you're building something that will be remembered in such a way."

It was this disregard for the rules that not only sowed the seeds of Saville's disappointment at the advancement of Britain's economic and cultural progress, but also gave him the freedom to develop the unique style that would make him famous.

His ability to marry high and low culture and classical and modern with art and life led to the creation of some of the most iconic promotional work (for The Hacienda) and album covers of all time.

For the first time in Britain, you could see the post-modern neo-classical photography of Bernard Pierre Wolff (which featured on the cover of Joy Division's Closer album) or the Futurist graphics of Fortunato Depero (New Order's Movement) on record sleeves and posters - which adorned the walls of teenagers for years afterwards.

"We were questioning popular culture and just saying: 'why can't it be more intelligent?' People who want to find the record will find it without having to see the name of the band in the top-left corner," he muses.

"The autonomy we all took from Factory gave us the opportunity to say: 'We'd like things to be like this', and then do them like that."

Saville is intensely proud of the city he hails from. He grew up in the affluent suburb of Hale, and feels Factory, and therefore he, had an indelible impact on the city's growth and regeneration.

In fact, his main job now is working three days a week working for Manchester City Council as its creative director. "They really believe in what they are doing. When they sit around the boardroom, you know they care about the people they're talking about."

However, at this point, he pauses (again and for the last time) in his reflections and suddenly says: "The investment in modern Manchester was Ian Curtis giving his life. That cannot be underestimated. He wrote some songs then took his life to let us know he meant it."