With a new band, a compilation album and a hit single, Terry Hall's life is starting to look interesting again - damn it..!

"There aren't any bands I'd go and see anymore," laments Terry Hall, staring glumly into his cappuccino. "Not a single one." The diffidence is studied. Notwithstanding Vegas - a glamorous new liaison with former Eurythmic Dave Stewart, a hit single ('Possessed') and a major album push by RCA in the offing - he prefers to present himself as yesterday's man. Alter an 'explosive' entry into the pop business with The Specials, he has maintained, rather than built, a career around various aggregations of mates, from Specials fallout, The Fun Boy Three to The Colour Field and recent collaborations with Ian Broudie and The Lightning Seeds. Vegas is just such an outing, combining his deadpan style and sharp lyrics with a friend's musical ideas - as if they'd accidentally found a guitar behind the sola. And, almost to his surprise, it just so happens that people are still interested...

"Maybe we will do some gigs ourselves, but it's a bit early. I don't really know. Because I've done a lot of gigs, I can't really go and see something and see it the way I did when I was 16, before I'd done anything. Like, when I go now I think, 'Mmm... wonder who's doing the catering?'"

The flippancy is Terry Hall's way of maintaining his own identity in an industry based on hype and forgeries. As a defence mechanism, it's impregnable. Ironically, the songs on Vegas betray a range of emotions at odds with the shrinking violet sitting in a cafe-bar in the West of London. Set against Dave Stewart and Olle Romo's pulsing and heavily programmed backing tracks, Terry's voice really sings, with a passion that will surprise those who remember the understated delivery of songs like 'Thinking Of You'. How on earth did it all happen?

"Well, it was in January of this year. Last year I signed to BMG Publishing, and I was sort of on the verge of doing a solo album. I was um'ing and ah'ing about it for a long time, and my new publisher also publishes Dave. He suggested that we should get together, just to see what would happen, really. So I talked to Dave around Christmas, and Dave had been asked to write a song for The Ramones, so he said d'you fancy coming over to France and we'll write one together. I agreed and went over in January for three days. We wrote a song - and it was shit. But we enjoyed each other's company."

This is typical. Whenever life threatens to sound a little bit too exciting, like going over to France to write a song for The Ramones, the temptation to bring it all back down to earth kicks in like a boot.

"Dave had some ideas that had been knocking around for, like, two years, just sort of bare tracks and stuff, and he asked me if I'd like to try writing some words for them - just to see what would happen. So I did that. And then we started recording it all. And we made an LP."

And you can't ask for a clearer description than that. In fact, a lot of the melodies on the said LP (only Terry Hall could say 'LP' and mean it) seem to grow organically from keyboard phrases within the backing track...

"There was a lot of stuff in place, yeah, an incredible amount already there, because it had been programmed and messed about with when Dave was on tour with The Spiritual Cowboys. That's all they were doing, for ages. I just got it and wrote words to it, really. With Ian (Broudie) and The Lightning Seeds' stuff it was different; we sort of wrote with an acoustic guitar, and we didn't really realise that we were writing songs because we'd known each other for a long time - and that's what happens, sometimes.

"With Dave, it had all been very heavily programmed, and when it came to mixing it I was listening to things I'd never heard before on tape, there was so much stuff on there. Then it was just a question of dropping things out. When I first heard the tracks, there were a few top line ideas, and there were some without any ideas. And we wrote three songs afresh, as we were recording. Actually that was back to the guitar: me and Dave humming away, and Olle (who did all the programming) listening to what we did and programming it. I don't get involved in that sort of thing; all I do when I go into a studio is check that the mic's at the right height. The good thing about being a singer is that once you've got a mic stand you're away."

Some songwriters resist the idea that a 'proper' song can be brought forth using clicks of a mouse, preferring to wait until the whole number can be rattled off Dylan-style before embarking upon what they would essentially call post-production. Not so Terry Hall...

"It's not really harder to write to a backing track. In fact, it makes it easier because that's half the job done. It all depends on who you're working with. I mean, I've sat down with people with an acoustic guitar and it's been the most boring day of my life, but it all depends on the people involved. What Ian did with the second Lightning Seeds album (Sense) was really good, sort of similar to Electronic, but Electronic's songs aren't so poppy and strong - although I like them."

The most boring day in Terry Hall's life: now there's something to muse over - coming as it does from an expert in ennui and a man whose prize possession is a satellite dish. Of course, it wasn't boring to work with Ian Broudie and his acoustic guitar, but it's already becoming a slightly blurred memory...

"Ian produced stuff for a band I was in a while ago. I can't remember what band it was - probably The Colour Field. That was when I first met him, about seven years ago, or something. And when I was writing for this possible solo album, I made a list of people I would like to write with, and he was on the list. Can I have another cappuccino, please?" A waitress has arrived. Neither Vegas nor The Lightning Seeds have yet exhausted all the ideas from what has been, by Terry Hall's standards, a pretty stout burst of activity, helped by liberation from that perennial creative block, contractual obligation.

"No, I've still got about 14 songs which are just there, but it's a question of, like, what do I want to do with them? They're still there; they just don't go away, really. I wrote most of them with a lad called Craig Gannon, (formerly in The Smiths) in Manchester, and we were going to form a small band. Very small. Just the two of us. We demo'd a lot of stuff, and it was all sounding really good. You know, pop music. And Broudie was going to produce it. But then I snapped up an opportunity to get off Chrysalis; that was more important, really, than recording the album.

"With me and Jerry (Dammers) and The Specials, they really wouldn't let us go. Jerry made one album in eight years, and they still wouldn't let him go. I tried quite a few ways. I thought of doing it an illegal way, which is just saying 'let me off', but then when Chrysalis got into a bit of a mess it was a good time to approach them and say, look, I'll ease the mess and go. EMI took over, and I found out in November that Jerry had been released, so I just got in there straight away and played, like, thick git, and made them feel really sorry for me till they said, all right we'll let you go then."

"I'm not signed to a label at the moment, which is fantastic, for me, because I can do exactly what I want. Like, stop the interview, I don't want to do it..."

Once gone, Terry could begin a new era of collaborations, so far with one friend signed to Virgin and one friend signed to RCA, and not a legal wrangle in sight...

"It only started last year. When you're with a record company for 13 years, the identity changes such a lot. When we signed to Chrysalis, there was Blondie and a few other good things - and it was a good label to be on. 13 years on and it's, like, Carter The Unstoppable Sex Machine, and you think 'I don't understand what that is, really'. You just don't feel like making a record on that label. And it's weird, because you don't want to be there - the way you didn't want to be at school, or something. So you try other things, and the obvious thing was to write with other people and not just record myself.

"I'm not signed to a label, at the moment, which is fantastic, for me, because I can do exactly what I want. Like, stop the interview, I don't want to do it. Do you know what I mean? If you feel in a good mood and you feel like doing things, you can, but if you don't, you can't. It's a bit weird; I'm in a band with Dave, he's signed to this label, and I'm not. It makes it a bit strange to be the singer and not signed - it's usually the percussionist. But it's good. Everybody's happy about the situation."

Terry sips on his cappuccino. "I learned two chords on the guitar, once. I can't remember what they were, but they were good. They sounded really good, know what I mean? And they were really easy. Honestly I can't remember them, I just know they didn't hurt my fingers. But then I got a bit stroppy. You know when you see Elvis Presley with a guitar, and he looks great, and you want to look like that? Well, I went like that (mimes hamfisted chord) and that chord was all right, and I did the other chord, and that sounded good, but then, on another song, I didn't know what to play. And everything else I did was shit, because I didn't know what I was doing. So I stopped doing it. But I did an American tour with The Fun Boy Three and I had a guitar roadie for two chords. And I treated him like shit, because you should, really, shouldn't you? Isn't that what guitarists do? I just kept asking if it was in tune - 'are you sure this is in tune?'"

The guitar safely to one side, working with Ian Broudie and Dave Stewart has enabled Terry to discover at least some of the benefits of recording technology. This, at least, has been a qualm-free experience.

"Worrying about use of sampling is like worrying about use of notes, or chords. It is what it is, that's the way things have gone. There's been stuff I've recorded that's appeared here and there, but there it is, it doesn't bother me at all. I don't see why it should. It just bothers people who are greedy, really. You've done something, it's finished, and it's gone. So somebody else is using that idea - well, I steal ideas all the time. Not with samplers, necessarily, but what's the difference? There's no such thing as originality. You can do this or do that till the cows come home, but it is down to actually selling it. Which is quite unfortunate, but you've got to be realistic, really.

"It's weird what people's reactions are when you stick a loop on a song; you just go like that (mimes nonchalant S1000 trigger jab) and it changes it, and people go wow, this is really happening, or whatever. But it's just the same song."

Much in Terry's world is 'weird'. He acts like a man bemused by his own success. But you also get the impression that everything he says is absolutely genuine. "I didn't get involved with Ian's recording at all, I just co-wrote the songs and did some backing vocals. But it just happened because we know each other, and our families know each other, and we just ended up in the studio. It wasn't planned or anything. I got more involved with Dave's recordings. Like, we did this session in Paris with players from the Paris Opera. One of them did that violin solo on 'Possessed'. I can't remember who - I was asleep or something."

You see - life getting a bit too interesting again... "It was a bit weird, that, because we recorded the album in the South of France, and it was really pleasant and sunny, and there were kids around and everything. Then we went into this basement (Studio Grandes Armees, Paris) and my head fell off. When you're down there working you don't see anything."

Look, Terry, do you actually enjoy recording? "No. But if you want to be on the record, you have to do it. Well, you don't really have to do it. Work that one out."

Talk of production techniques and songwriting themes really doesn't cut much ice with Terry Hall. He has that magnificent apathy which has its roots in punk nihilism, and the sulky cut-the-crap disdain for hypocrisy which was such a highlight of those 2-Tone days. As with the best writers from that era, the superficially blank gaze is really a piercing stare.

"You do what you do and you know what you know, and all I know is my tiny, boring existence. What I do from day to day is watch television and play with my kids. So that is what I write about. And I like television, I like every form of television. I like satellite TV; I've just got a dish installed, and it's the most fantastic thing ever. If you don't get one, you've got four channels, and if you get one you've got, what is it, 18 channels, and it's just fantastic. You can watch anything, and you can watch all day and all night. It's full of shit, but what's wrong with that? Shit's good, really.

"If I write a song, I just write about what I know, it's really simple. All I know is all I know, and I don't really want to know anything else. I don't want to know what's happening in certain countries; I don't feel qualified to write about homeless people, the way Phil Collins does - he's obviously had it rough, you know, sleeping with his head in a bass drum down Waterloo Station. What's the point in lying? I don't want to save the rain forest. I'm sorry, but I really don't."

"Dave had been asked to write a song for The Ramones, so he said d'you fancy coming over to France and writing one together. I agreed and we wrote a song - and it was shit. But we enjoyed each other's company"

Well, you'd be unlikely to save it with a song... "You won't save it with a song, no. A long time ago we wrote a song called 'Ghost Town', and we thought we were going to stop every inner city riot in Britain. But we didn't. The Beatles wrote about girls. That's a good subject."

Speaking of girls, Terry's duet with his Vegas partner's wife Siobhan Fahey on the song 'Walk Into The Wind' is the first time they've appeared together on record since Bananarama joined The Fun Boy Three for the 1982 hit 'It Ain't What You Do It's The Way That You Do It'. His response to this frankly trivial observation is typically ingenuous: "Well, you know where we recorded the album, at Dave's place - she lives there. So I met her again in January after, what, nine years. Still the same, really. Same thing.

"With recording, it's what happens on the day, on the hour, and a lot depends on who's around. If you're arguing about everything and you're trying to make a record, you're just not going to enjoy it. But if everybody's really happy - painfully happy - you just enjoy it."

These studio-oriented collaborations all seem terribly grown up. Do you miss being in a band? "Well, I feel like I am in a band, but it just happens in a different way. It is usually friends who say 'let's form a band', but this was, like, a band who said 'let's be friends'. It wasn't like Dave doing everything. He played very little. I mean, he had a lot of the ideas, musically, but there was Olle and Manu (Guiot) as well.

"There'll always be bands, even if the shape of them changes. A band I really like is XTC. But I don't really know where they stand, now. They're a great band, in any form. Maybe they've been going through weirdness with Virgin, I don't know. When XTC release an album I'll go out and buy it straight away. I won't even read any reviews, or anything, I'll just go and buy it. It's obvious from their record sales that they do get a bit swamped. But it shouldn't stop you, really. I wrote some songs last year with Andy (Partridge) for my solo album, and they're fantastic. I know it's weird me saying this, but you know when you write a song and you think 'that's fantastic', it just strengthens your identity.

"But it's still the same thing, underneath. There's a band called Suede, who I don't know, I've never heard, but you get the feeling that there'll always be bands like that who'll always play, always get a deal, I don't know, maybe because they're talented, or whatever. Things change on the surface - cars look different from the way they used to. You've got to be prepared to go with the flow, a little."

Going with the flow of Terry Hall's consciousness is a treat. As the froth on the cappuccinos subsides into bewildered dregs, Terry takes one more stab at the heart of the matter. As usual, it ends up on his sleeve...

"Realistically, you grow out of saying 'let's form a band and go and play lots of dirty shit-holes'. You just think, why? But, like, when you're 16 or 17 those shit-holes look like Wembley, they look fantastic. You can put up with such a lot when you know nothing else. I've slept on a table for three weeks, and I don't really want to go back to that stuff. And when you get married and have kids, you get really boring and dull. In a nice way."