He's been credited with two main contributions to the culture of the late 20th century: spotty boxer shorts and primrose jumpers. Other people may have had these ideas, but it was the persuasive Paul Smith who got men to wear them. It is a small mark to leave on history, but then Mr Smith is a modest sort of fellow, understated, as English businessmen used to be before they started reading US 'how to succeed' guides. 'I don't believe in bullshit,' says Paul Smith. 'It's a total waste of time.'

When coffees don't appear, this millionaire chairman of the company goes and squats at the top of his spiral staircase in his Covent Garden office and whispers a reminder to his staff down below. At 46 he says he can't remember having really lost his temper, ever.

His real achievement, of course, is not the boxer shorts, but survival. Paul Smith is arguably Britain's most successful menswear designer. While there is nothing very original about his designs, they are cleverly put together, classicism with a spike of humorous bad taste.

Fashion firms, particularly at the top end, go pop and fall apart with the predictability of a box of Christmas crackers. Not Paul Smith. In the Eighties the business grew vastly, largely through a licence deal with a Japanese company, now bringing him royalties from 69 Paul Smith shops in Japan. His company Paul Smith Ltd (not including his licensed operations) had a turnover of about pounds 11m in 1991.

But throughout that whiz-kid decade he didn't over-borrow, he didn't take many risks, he didn't make Richard Branson's mistake and go public. How did he come to be so different from the rest?

Paul Smith is a salesman, son of a salesman, and also a professional stylist: naturally there is a version of himself that he wants us to buy. He puts himself on display as the model businessman for this decade: a low-key, self- deprecating Mr Careful with just a touch of flair peeping out like a pair of jazzy socks from under grey flannel. Another part of it is the contrived boyishness of his office in Covent Garden, all tin toys and joke spaghetti sculptures.

'Where would you like me to sit?' he says, in his reassuring Nottingham accent, for all the world as though it was my office rather than his; and he folds his 6ft 3in frame on to a small chair, sticking his knees out horizontally to fit into the space. The slight gangliness, the trace of shyness combined with directness - Mr Smith is quietly good at setting people at ease.

'I think I got that from my father,' he says. After the war Mr Smith senior was a 'credit trader', selling clothes and household objects to housewives in their homes: women's button-through print frocks, coat dresses, men's heavy corduroy work trousers. They paid in weekly instalments. In that job, if you did not have an instantly likeable personality, suitable for coaxing and soothing, you had to invent one. Mr Smith senior evidently had what the job took.

'What I got from my father is an ability to communicate with people, to make people feel comfortable. It's helped me a lot.'

If Paul Smith came to your door now with a bag of brushes, I can tell you, you would buy. You wouldn't feel pressurised, and you wouldn't feel nervous. You would want to help him. And when your spouse came home, you would say: 'Ever such a nice lad came to the door today.'

But you might end up with more brushes than you ever wanted.

In 1976, for example, Mr Smith, who was already running a successful shop in Nottingham, had decided it was time to start producing under his own label and open a showroom in London. So he shone his torch through the letterboxes of a host of derelict warehouses in Covent Garden, looking for one he liked. When he found it, in Floral Street, it took three months to track down its owner, a retired butcher. Mr Smith asked for a lease in his nice modest way: 'I said, I'm a young designer, looking for a place to rent . . .' and he agreed.

'Then my father said it was good to buy things. So I went back and asked, could I buy the freehold? And eventually he said, pounds 35,000.'

He tried Barclays for a loan, 'but they didn't like my long hair'. I think I detect a glint of triumph in his brown eyes at this point, and defiance in his still- longish hair. 'I went to Yorkshire Bank, and they lent me pounds 5,000. I'm their biggest customer in Nottingham now.' The Leeds tailor who made up his suits and jackets liked and trusted him enough to lend him pounds 10,000.

Then Mr Smith went back to the retired trader. 'I told him I could only afford pounds 25,000. And he said, 'OK, you can have it.' I said, 'That's wonderful. But the truth is, I haven't got pounds 25,000 either. I've only got pounds 15,000.' And he said, 'You can't have it for pounds 15,000, but I'll lend you the pounds 10,000 myself and you can pay it back over 10 years.' '

I sigh when he tells me this, and I look around the warehouse now in one of the most fashionable parts of London, and say: 'Such is the power of a persuasive personality.'

And Mr Smith sits up straight in his chair suddenly and says urgently: 'Yes, but . . . but . . . you've got to deliver the goods. Persuasion or flattery is one skill. But not letting people down afterwards is very important] I paid him back]'

This is such an oft-repeated text of Mr Smith's business philosophy that it's surprising it isn't framed in cross-stitch and hung in a downstairs loo. He says it so persuasively you want to believe he means it.

But the young men who go into Paul Smith's shops and buy the quiet suits and jackets there, expensive as they are, do find they wear well.

His father's attitudes were reinforced by Paul Smith's own early experiences working for men who had lived through the Great Depression. 'When I left school at 15 my dad got me a job in a warehouse. They used to save string, they'd reuse the backs of old invoices as notepaper, they were always turning off lights. I still turn off lights,' he says.

Slowly and steadily, therefore, he went through the Eighties, expanding into children's wear, building up to a modest five shops in England, one in New York. When he made money he invested in freeholds, warehouse space, a manufacturing base for some of his wholesale production, 80 per cent of which is now exported. 'I've never had a major financial or business hiccup,' he maintains. The personal consumption is modest enough: a Holland Park house, one in Tuscany; his car, like Richard Branson's, is an old Bristol, a discreet way of showing taste.

In his shops you see Proustian recollections of lost time made solid in mahogany and oak: Fifties Nottingham men's shops, down to the old light fittings, speaking of reliability and respectability and, ironically in view of the high prices ( pounds 50 for a shirt in the sales), times of not wasting string.

'When I look back,' he says of Nottingham, 'I realise how influenced I was. I'd cycle around - there'd be the coal miners, Derby tweeds. My brother worked for the Post Office, he wore that blue cotton drill GPO shirt - and then the elegance of the squires. There was an amazing mix of all the classes in Nottingham.'

As in D H Lawrence? 'Very like D H Lawrence,' he says, smiling.

And there is another influence visible down in the shop in Floral Street that D H Lawrence might have enjoyed: nude women hanging on the walls. Their effect, of course, is to announce to the browsing young men that this is a thoroughly heterosexual shop, that these yellow jumpers and bright ties are not - good heavens - homosexual wear. But they are also a clue, like the luridly bright tie covered in sequins and heart shapes on the counter ( pounds 30, sale price) to the other big influence on Paul Smith.

Indeed, one of the nudes is by her: Pauline Denyer, the woman he has lived with for 25 years. He met her in Nottingham, a Royal College of Arts fashion graduate. She had two children, then aged five and eight, but they have none together. 'We talked about it - but it just didn't happen.'

I ask why, in all these years, they have never got round to marrying. 'We've never talked about it. Ever,' he says.

But, I say, astounded, maybe for 27 years she's been thinking, I wish he'd propose. He gives a small laugh. 'Probably,' he says.

It was because of Pauline, then teaching fashion, that Paul Smith went to Paris and saw Chanel showing, when she was still alive, saw Yves Saint Laurent when he first showed topless dresses, saw the very catwalks where the New Look originals of those button- through, print cotton dresses his father had sold once walked, and realised that a bit of theatre and a bit of shock was what made fashion out of clothes.

Pauline encouraged him to go into business on his own, and designed the clothes in the early days. In effect, she was his fashion tutor. Because Paul Smith, one of the most successful designers in Britain, never studied fashion at college. It is a sad reflection on the way Britain handles its fashion students that this, very probably, is one of the secrets of his success.

He spent his time learning business skills instead. 'I was trained by doing it,' he says. 'When I first had a shop it was only open two days a week. I had to work the rest of the time to make money because I was selling things people didn't want. But in the end they did want them.

'Even when I opened a shop in Covent Garden it lost money to start with, but I supplemented my income in other ways - consultancy, organising manufacture for someone. Only in the last eight years has it just been the income from Paul Smith Ltd that I've relied on.'

In the early Eighties Pauline eased out of the business into her own interest, painting, at home in her Holland Park studio. 'She's the inspiration,' he says. 'She's been such a contributor to the business itself. She was instrumental in making me think about well-made, high-quality clothes. And one of the key points is that I've been very content at home. I wasn't searching. I was able to concentrate when I was at work. I used to work a long day. When I'm in Japan I still work between 14 and 17 hours. It's only in the last couple of years that I've started working a five-day week. I travel so much that it was important to respect the relationship.'

I ask if I can talk to her about Paul Smith, the man and the business. 'She'd hate that,' he says.

Paul Smith, let alone Pauline, is a singularly elusive person. He carefully avoids giving interviews in his home. He even refused to tell me what profits he makes. 'They're in line with what would be expected on the amount of business we do,' he says. The accounts at Companies House for the year ended June 1991 show a profit on ordinary activities after tax of pounds 130,202 for Paul Smith Ltd.

My guess is that not only is he a very earnest individual, despite his tin toys, but one with a strong desire for control, of his temper and his business.

He brings the interview to an end on the dot and shows me down to the mahogany shop below. It is because Paul Smith is so much in charge, of course, that his stock so perfectly reflects his personality and his past. This year his shop in Paris opens; next year he is launching a line in women's wear. No one should be surprised if it contains, between well-tailored jackets and nicely cut skirts, one or two Fifties cotton button- through frocks.

(Photograph omitted)

Hunter Davies is on holiday.