Ken Loach's blistering new film about Britain's migrant workforce attacks the culture of "flexible labour". Gordon Brown is enemy number one, he tells Amy Raphael

Ken Loach sits at an old wooden table, his corduroy suit crumpled, the collar twisted. The small back room of his Soho office is cluttered. Propped sideways along one wall sits a framed poster for Kes. The fireplace is filled with untouched boxes of champagne and cigars; on the mantelpiece sit a dozen awards, including, hidden inside an austere box, the Palme d'Or he won last year for The Wind That Shakes the Barley ("It's embarrassing that they keep it there. You can touch the holy relic, yes - it'll cure your rheumatism"). He talks softly, makes no assumptions that you have seen any of his films and, unusually, often asks questions back.

At 71, and after four decades directing, Loach is still driven to make films about people who remain largely invisible in society. His latest - It's a Free World . . . - goes out on Channel 4 this month before being released on DVD, having already picked up the Best Screenplay award at the Venice Film Festival. It looks at the world of migrant labour in Britain, which, says Loach, he had been discussing with his long-time collab orator and screenwriter Paul Laverty for some time. "We were trying to get into the mentality of the people who do the exploiting. We wanted to say, 'It's not an aberration - it is the way people think society should be run.'"

The story follows Angie (played with great energy by the newcomer Kierston Wareing), a feisty, sexy single mum in her early thirties who sets up a recruitment agency for migrant workers. Increasingly seduced by easy cash, she starts to bend the rules and break the law. Along the way, she slowly loses her compassion, starts seeing the illegal workers she employs as a means to an end, and finally lets her entrepreneurialism give way to exploitation. Loach says that his primary motivation was not to effect change, but to examine "why [exploitation] happens. Angie's logic is inexorable . . . The clothes are in the supermarkets. We're buying them. People are living in tin container sheds with no windows. That's central to our economy now. Families fall apart because of flexible labour - which is something Gordon Brown advocates."

Loach's disillusionment with Labour is well charted: he joined the party in the early 1960s and left in the mid-1990s - later, perhaps, than one might have expected, considering some of his views. "I stayed in the party throughout the 1980s because there was still a radical element that was critical of the leadership," he says. "Then, at some point in the late 1980s or very early 1990s, the party started paying subs by deducting money from members' credit cards or by direct debit. For me, it was the last vestige of the local organisation disappearing: no one was coming round to collect the payment and have a chat about politics any more. So it was a small but final straw that made me leave."

Naturally, Loach was a fierce critic of Tony Blair ("a right-wing careerist"), and is no more enamoured of his successor. "Gordon Brown is and always will be committed to the interests of big business, so there's no way I want to be involved in the Labour Party again. It would be of real benefit to those still left in the Labour Party to recognise it for what it is - as a party of business. I was also hugely disappointed by the failure of John McDonnell's camp to contest the leadership and by Brown's not even allowing his name on the ballot paper."

Loach still defends his association with the Respect party, which dates back years. "There seemed to be the possibility of a new left rising out of the anti-war movement, around the central ideas of opposing American imperialism, opposing privatisation and supporting publicly owned industries and public services. Around those central planks there was space for a movement of the left. So I was involved with Respect from the outset and am still a supporter." He does, however, hint at some distance between himself and Respect's figurehead, George Galloway. "When organisations are small, people come to the fore. In larger organs there is more space for a broad front." What did he make of Galloway's Big Brother appearance? "Well, it's not something I would have done. I think Galloway has made contributions. After all, he is the only person to have left the Labour Party in parliament because of the war. While people can sniff at his appearance on Big Brother, he's the only one who has left the party on principle. And accused Blair of telling lies, which he did, and the whole cabinet of being war criminals, which they are. So there are bigger issues, really."

Despite his political activism, Loach is reluctant to describe himself as a political director: "Just a director, please." But neither does he place himself squarely in the film world. "I'm not a great cinema-goer. I enjoyed The Lives of Others, and now I'm going to see Nick Broomfield's film about Morecambe Bay."

In addition to It's a Free World . . . a two-volume DVD box set of Loach's films has just been released, spanning the 40 years from Cathy Come Home to The Wind That Shakes the Barley. Yet, asked if he is proud of his back catalogue, he at first looks blank. "Well, I don't know." Then he smiles: "I can't pretend it wasn't nice to see the best films all together, because it was." Does he have one or two particular favourites? "No, not really. I couldn't say that. But the one I was glad to resurrect was The Gamekeeper, because very few people know about it." The Gamekeeper (1980) is a hauntingly beautiful film based on a Barry Hines novel (Hines also wrote the screenplay; he worked with Loach on five films, the most famous of which is still Kes) about a steelworker-turned-gamekeeper. While he revels in his new job, his son is bullied and his wife isolated. The poachers he chases off the estate are his former colleagues. Like much of Loach's back catalogue, it was dismissed by some critics as bleak, but in fact it has the signature romance and humour that are so often overlooked.

Loach's films have usually had a more sympathetic reception in continental Europe than they get at home. The Wind That Shakes the Barley was widely distributed in France, but received only art-house distribution in the UK. The director says he almost gave up film-making during the 1980s. "I did a whole series of documentaries that were banned. I did a play at the Royal Court [Jim Allen's Perdition, about Nazism and the Zionists] that was outrageously pulled by Max Stafford-Clark." In desperation, he turned to the most un-Loachlike pursuit of making television adverts for, among other things, Tetley's Bitter and the Guardian. "Fortunately for me, I wasn't very good at them so I wasn't asked to do a lot."

He resists, however, the temptation to moan about film budgets. "It's not really a struggle. Money beyond a certain point is just corrupting. If everyone knows that one or two people are getting huge amounts of money, it changes the relationship." In his work, he abides by socialist principles: no Winnebagos, everyone hangs out in the same little room together, and all cast members are treated as equals. "It's what they call a union crew and it's well above union rates. It's efficient, and everyone is much happier."

So what keeps him going? One important element, he says, is family. "I've been very lucky. I've been married for a very long time, very happily. I get told off on a regular basis, but who doesn't? There are lots of grandchildren I don't spend enough time with. But film-making for me is the human equivalent of that dog food, Pal - it prolongs active life."

"It's a Free World . . ." is broadcast on Channel 4 on 24 September (9pm); the two-volume "Ken Loach Collection" (Sixteen Films) is out now

Ken Loach: the CV

1936 Born in Nuneaton, Warwickshire, only child of his mother and electrician father.

1963 Joins the BBC as a trainee television director after graduating from Oxford in law.

1965 Up the Junction (BBC), portraying life in impoverished south London, marks the start of Loach's creative partnership with Tony Garnett, the story editor and producer.

1966 Achieves national fame with Cathy Come Home, spurring public outrage at the state of housing in Britain.

1969 Makes his best-known film, Kes, the story of a troubled boy and his kestrel.

1984 A documentary about the miners' strike, Which Side Are You On?, is commissioned for The South Bank Show but because of its "highly partial view on a controversial subject" LWT never screens it.

2004 Elected to the Respect coalition's national council, having resigned from the Labour Party.

2006 Wins the Palme d'Or at Cannes for The Wind That Shakes the Barley and is awarded the Academy Fellowship at the Bafta Awards.

Hermione Buckland-Hoby

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