A director calls: Inside the world of Stephen Daldry

Even by his own starry standards, this has been an eventful year for Stephen Daldry. He was nominated for an Oscar for his controversial movie The Reader. He walked off with the Tony Award for Best Director in a Musical for Billy Elliot, which is taking over a million dollars a week on Broadway. And he directed David Hare in Berlin/Wall, the dramatist's pair of matching monologues about Israel (where they have erected a wall designed to keep people out) and post-1989 Germany (where they have dismantled a wall designed to keep people in). This diptych moved to New York, where it had a brief run at the Public Theatre.

Now Daldry is in London overseeing the return to the West End of An Inspector Calls, the production which put him on the map internationally. It was unveiled in 1992 at the National Theatre, where it startled audiences in not only giving this old JB Priestley war-horse a thrilling theatrical make-over, but in recontextualising the drama so that it became a devastating riposte to current Thatcherite values. The director achieved this by expressionistically highlighting the political climate in which the play (written in 1944, set in 1912) was launched.

I caught up with Daldry in a lunch-break during preparations for the revival. The last time I interviewed him, four years ago, I had to scurry round London in his wake as he negotiated the logistical convolutions of rehearsing three alternating boy leads for the premiere of Billy Elliot. We even visited a room where a new dance was being tried out on a fourth boy, unbeknown to the lead trio in case it was never used, and in case it would worry them unnecessarily. This latest encounter, in a hotel restaurant, is more civilised.

Still boyish at 49 and still engagingly prepared to flirt for Britain, Daldry tucks into a "duck platter", while reflecting on the critical flak roused by The Reader, the cultural complications of Billy Elliot going global, and the imaginative background to his stunning staging concept in An Inspector Calls.

The National production was not, he points out, his first attempt at Priestley's play. There had been an earlier draft of it at York Theatre Royal in 1989. The son of a bank manager and a singer ("Somerset's answer to Eartha Kitt"), he'd started directing at Huish's Grammar School in Taunton. After graduation from Sheffield University (where he went on an RAF scholarship), he made what sounds both a corny and unconventional career move by literally running off with the circus and training as a clown in Italy.

This grounding has served him well as a director, he argues, since it gives him the ability in the rehearsal room to liberate the "inner clown" in actors. Back in Sheffield, he was mentored by the late, great Clare Venables, who was running the Crucible. I vividly remember a little (scarcely reviewed) studio show he did there at the time – an anarchically comic extravaganza about the Titanic disaster in which floods debouched from cupboards and the set sprang all manner of wild leaks. It was a million miles, in mad creativity, from the weepy film epic.

But by 1989, he was in London and unable to find a theatre job. "I was working in a Greek taverna in Camberwell, when York came up with the offer of An Inspector Calls." Not on the face of it, the most enticing prospect? "No – the play had become a staple of the amateur stage, the joke being that not only had everyone seen it, but most people had appeared in it." Daldry, though, began to read widely about its author. "I discovered that Churchill had stopped Priestley's hugely popular Sunday radio broadcasts during the Second World War. For Churchill, there was a single war aim: to defeat Germany. But Priestley, even in the darkest days, also insisted on asking what kind of country would be built afterwards. He'd fought in the trenches in the Great War and knew how badly the hopes of 'a land fit for heroes' had been betrayed. He was determined that this would not happen again."

In the play, a mysterious Inspector arrives at the home of a well-to-do Northern industrialist and proceeds to expose how each person in the Birling family bears some measure of blame for the suicide of young, poverty-stricken, unmarried mother. He departs, issuing a warning that is also a prophetic Socialist rallying cry: "We are members of one body. We are responsible for each other. And I tell you the time will come when, if men will not learn that lesson, then they will be taught it in fire and blood and anguish. Good night."

Daldry knew that he wanted to bring the 1940s into some kind of explicit relationship with this selfish Edwardian clan. "The first idea I pitched to York was to do it as a play-within-a-play put on by troops in North Africa towards the end of the war as they debated who to vote for in the next General Election." By now, though, he'd read how Priestley had disliked Basil Dean's conventional staging of the piece in 1945, but had admired the first Russian productions which pushed beyond drawing-room realism. He'd also immersed himself in Priestley's time-theories.

"He believed that in a fourth dimension, the past, present and future co-exist". It's a notion that "is hard to take seriously these days", but it gave Daldry the clue to the production's eerie triple timeframe, brilliantly perfected when – after making his name at the Notting Hill's tiny Gate Theatre and becoming the artistic-director-designate of the Royal Court – he persuaded Richard Eyre to let him mount a second assault on the play at the National.

On a hallucinatory set, designed by his then partner, Ian MacNeil, the Birling home is a cosy doll's-house marooned in a rain-swept, war-scarred landscape and precariously perched on stilts so that, at the climax of the investigation, it can tilt forward, sending the dinner service and bric-a-brac smashing to the ground outside. The family's fate is re-enacted before a crowd of silent 1940s spectators.

The Inspector is a newly demobbed soldier who gives one of the mid-century ragamuffins an orange, suggesting that he has come directly from service in North Africa to pass pre-emptive judgment on a past that must not be allowed to repeat itself. The future is represented by the theatre audience. In 1992, the production caught the mood of growing disillusionment with the Tories and felt like a direct rebuke to the Thatcherite conviction that "there is no such thing as society", and that there should be a return to Victorian values. How does Daldry think it will come across in these credit-crunch times?

"I watched a run-through in the rehearsal room yesterday and it seemed to me to be particularly pertinent as a call to arms for collective responsibility against the wild, unregulated, and purely profit-driven selfishness that's created vast levels of unemployment and distress throughout the world."

The production won him his first Tony when it transferred to Broadway in 1994. He wonders, though, what the reaction would now be in a country where "after the nationalisation of the banks, there are millions of protesters marching on the streets of Washington complaining that they have a socialist government."

The recession proved to be a paradoxical blessing for the Broadway adventures of Billy Elliot. Daldry has always been fortunate in his timing, as he'd be the first to admit. His genius is his ability to run like lightning with his luck. At the Royal Court, he coincided with the biggest explosion of young writing talent (Sarah Kane, Mark Ravenhill et al) since the days of the Angry Young Men, and his swiftly decisive response was to programme a record number of productions upstairs and down. The advent of the National Lottery gave him the funds to mastermind the brilliant refurbishment of the Court's building, which magically preserves the soul of the theatre and keeps faith with its illustrious ghosts, while equipping it with state-of-the-art facilities.

If he'd taken the Lee Hall/Elton John musical to America directly after the British premiere, the miner's-strike backdrop might, he says, have come over as just "a strange little English labour dispute". But when Billy Elliot finally arrived Stateside, the economy had obliged him by tanking, and audiences were able to identify with the pain of unemployment and "a community under crisis". This vindicated the decision to keep the show defiantly British, in contrast to the Americanisation of The Full Monty, which was relocated to Pittsburgh.

"Lee Hall and I had fantasised about setting Billy in the Deep South during segregation, and making it a totally black show about black miners and a little kid who wanted to dance, and rewriting the whole thing and getting new music. That conversation lasted all of 20 minutes."

What had providentially delayed Daldry in the move to Broadway was the shooting of The Reader in a screen adaptation by David Hare of the Bernhard Schlink novel. But it's this project that has attracted, from some commentators, the most negative criticism in the director's career. Kate Winslet won an Oscar for her portrayal of Hanna Schmitz, a tram conductor in Fifties Berlin. She has an affair with Michael, a 15-year-old boy who, years later, as a law student, is shocked to witness her on trial for an appalling Nazi war-crime. Does the film, as its detractors claim, sentimentalise this former Auschwitz guard, who allowed 300 Jews to burn to death? Like the book, it reveals that she joined the SS, not through ideological conviction, but in an effort to conceal the shame of her illiteracy. Is illiteracy being offered as an excuse?

Daldry defends the movie by pointing out one crucial difference with the Schlink original. Hanna learns to read in prison, helped by the tape-recordings of books sent to her by Michael. In the novel, we learn, after her suicide, that she had been studying the works of prominent Holocaust survivors such as Primo Levi and Elie Wiesel. This suggests that she experienced some form of tragic recognition.

In the film, asserts Daldry, Hanna "dies in ignorance. Her moral illiteracy is intact, even if the problem of her actual illiteracy has been solved. Despite the fact that in her cell, she had some of the great works of literature [we see her make her scaffold from a pile of classics] she is proof that education and morality are not necessarily linked. The idea that she was somehow redeemed by literature seemed to me both trite and false. It would make a clearer emotional arc but it's just irresponsible to the subject matter. Germany was one of the most literate societies in the world and yet it created the Holocaust".

But doesn't the film earlier present Hanna as the pitiable victim of her illiteracy? "I was hoping for a level of ambiguity. I like the idea that you don't know where you are with her – your sympathies shifting for and against..."

He "spent some time with the survivor communities in both New York and LA. What concerned them was not the sex, or the depiction of the Nazi guard, but the penultimate scene with the survivor in New York." After Hanna's death, Michael travels to Manhattan to fulfil her wish that her money be given to the camp inmate who, as a child, had escaped death in the fire. Deliberately, it is a deeply uncomfortable scene. The woman is a sleek, moneyed, Park Avenue success story. "She even has German art on her walls, though no one seemed to pick that up".

She rejects the cash as a tasteless bid for absolution, but instead of throwing the hapless Michael out, she makes a gesture of generosity by accepting Hanna's tin box because it reminds her of one she lost as a girl. But has the film any right to be making reconciliatory gestures to Germans through a fictional victim? It's typical of the audacious risks Daldry took that the character places this dubious memento next to a photograph of the family who perished in the camps. And, yet, I agree with him that there is always a properly provocative ambiguity. After all, the woman's riposte to Michael: "Go to the theatre, go to literature, if you want catharsis. Don't go to the camps. Nothing comes out of the camps. Nothing." – is equivocally situated. Is it a complication or an invalidation of the movie up to that point?

The refreshing thing about Stephen Daldry is that he takes his work, but not himself, seriously. There are a couple of moments in The Reader where we see handwritten lists of all the books that Michael has taped for Hanna. At the top of one of these, there is Beckett's Endgame. (How intriguing it would be to hear Ralph Fiennes's solo performance of that multi-character drama...) I tease Daldry that I freeze-framed the film at that moment in the hope of finding An Inspector Calls further down Michael's catalogue: a Hitchcock-ian in-joke available only to the literate viewer. Daldry yelps with delighted outrage. "You're right. It would have been a good moment. But I put Tintin in instead. I couldn't resist Tintin."

In Priestley's Time and the Conways, the middle act jumps forwards by 18 years to give the audience a grisly glimpse of the fate lying in wait for its characters. Back in 1989, what kind of future for himself would Daldry have expected to see, if offered a comparable sneak preview?

"The first thing to say," he laughs, "is that I would never have expected to be still directing An Inspector Calls. But then, in 1998, when I was filming Billy Elliot with Jamie Bell, you couldn't have convinced me that, 11 years later, I would still be directing a stage version."

And there's much more of that to come. Next year sees the opening of the musical in Chicago, Toronto, Seoul and Tokyo." South Korea might, one gathers, prove tricky. "I was talking to a journalist from Seoul and he said: 'There could be a few problems. We don't have ballet. There are no trade unions. And casting Billy's friend may be tough because we don't have gay people in South Korea.'"

There have been 36 Billys to date and you sense that this proliferating community of alumni appeals to Daldry's fondness for the idea of an extended family. He's a gay man who happens to be happily married to the American performance artist, Lucy Sexton, and to be the father of a six-year-old daughter, Annabel. Both his homes (in Manhattan and Hertfordshire), though not precisely run as communes, are filled with live-in friends. The Daldry ménage continues to be a source of prurient speculation. He has developed a clever strategy of asking and answering all the intrusive questions in advance of the journalists. "Am I gay? Yes. Do I have sex with my wife? Yes." Etc, etc. He and Lucy love one another and they wanted children.

I say that I understand all of that, but why did they go the lengths of getting married? Million of other less conventional couples don't. He offers a bracingly pragmatic response. "Because I have fantastic health insurance through being a member of the Directors Guild of America. Obviously, to get it for my partner and children I have to be married. Now, I could not be married and pay out £30,000 a year, or I could be married and it all comes for nothing. What would you do?"

It does Daldry credit as a director that he has such an instinct for stage projects with staying power and it does him credit as a human being that he is so involved in the resulting familial after-care. It's sad, though, that these gifts and his film commitments leave this major directorial talent with relatively little space for new theatre work. Next year, he'll be 50, the age at which his father died and he says that he's increasingly conscious of mortality. He likes to think of himself as in Act III of a five-act structure. That's a metaphor from theatre, not film, where they think in threes.

During our conversation, he takes quite a long call about a prospective movie (though he would not disclose whether this was the mooted adaptation of Michael Chabon's bestseller, The Amazing Adventures of Kavalier & Clay). But he has, he tells me, no immediate plans for the stage.

It's not the first occasion that An Inspector Calls has returned to the West End. There was a revival in 2001. But this time it will be watched by teenagers who weren't even born when the production was premiered. Daldry is intrigued to see whether, to these people, its 1980s conceptual aesthetic will have begun to seem dated. He needn't worry too much. The show remains fresh because it offers a spooky, permanently dazzling demonstration that a play is the electric interaction between text and context. I doubt that there'll be any desire among the young to rename it An Inspector Palls...

'An Inspector Calls' runs at the Novello Theatre, London, until 14 November (0844 482 5170; www.aninspectorcalls.com)