It's just after lunch and the King's Arms is heaving. There are people milling about the corridor, propping up the bar, and chattering excitedly at the foot of the stairs. Why the crush, the mood of anticipation? Since late last year, this Salford pub has belonged to Paul Heaton – and this afternoon he'll be playing a gig in the theatre upstairs.

As the crowd files in for the support act, Heaton and I head around the corner to a quieter pub, where the music plays brightly from some distant speaker. This is the first gig of Heaton's pub tour: an excursion that will see him cycling from venue to venue, covering 2,500 miles over 40 days, in honour of his 50th birthday. This will be followed by a run of shows – at London's Barbican, Sheffield Lyceum, Birmingham St Paul's and Salford Lowry – that will see him perform with various other singers The 8th, his eight-chapter narrative pop song about the seven deadly sins. Heaton, born in Cheshire and brought up in Sheffield and Surrey, will follow The 8th with his greatest hits, including material from his time with the Housemartins and the Beautiful South, as well as solo work.

With a half-century under his belt, it seems a ripe time to appraise Heaton as one of our finest songwriters: his music reveals an exuberant ear for melody, his lyrics a keen eye and a brilliant wit. And he carried that gift from the Happy Hour days of the Housemartins, through the million-selling Don't Marry Her days of the Beautiful South, to such solo work as 2009's magnificent album Acid Country. Heaton's skills manifested themselves early – as a schoolboy, he yearned to be a new Spike Milligan. "I used to keep quote books," he says. "If anyone said anything, I wrote it down: things about teachers, poems and rhymes. I used to show them to people and make everybody giggle." He smiles quietly. "And then punk happened."

Fired up by Elvis Costello, the Clash and the Jam, he set about adapting his writing to mirror theirs, although there was one problem. "I didn't really know what they were on about," he explains. "I sort of understood what [the Clash's] White Riot was about, but it was a different language. It was political, analysing things I didn't realise existed."

When his older brother formed a band, Heaton pestered them to let him join. "My brother and John, the bassist, had a more working-class attitude than me. They wanted to get jobs and get married young. My brother started lorry-driving and John became a telephone engineer. I didn't want to do that. I only wanted to be in a band."

Heaton had left school with no real qualifications. "I'd lied to my parents and told them I was taking O-levels and I wasn't. I was taking CSEs. The only O-level I was taking was English Language and I missed the exam. I misread when it was. Idiot." He got a job with a company called Industrial Newspapers. "They produced papers like the Foundry Times and Temperature-Controlled Storage and Distribution. I worked in accounts. I did it for two years because I felt my Dad wanted me to. But when I handed my notice in, he said, 'If you're going to do music, do it.'"

By now, Heaton was in another band – singing and playing trombone with Norman Cook and two friends. They were busking and making good money, so Heaton was shocked when he learned they were all quitting to go to university. "I'd never known anyone who'd been to university, no one from our family, no one from my school. I thought it was a real sell-out. At the time, to me, it was the sort of thing snobs did. And we was punks. How can you go through punk and go to university? I was gobsmacked."

It was time to leave Surrey. "I wanted to move back up north because the university thing had given me a bit of an anti-southern feeling." He found himself in Hull, though didn't warm to it immediately. "I'd become a bit Surrey: not so much the accent, but I was quite an eager little beaver. And Hull is quite sarcastic and retiring. It's not like Sheffield and Leeds, which can be outgoing and brassy."

It was out of this stint in Hull that the Housemartins were born, in late 1983, reuniting Heaton with Cook to produce two albums: London 0 Hull 4 and The People Who Grinned Themselves to Death. Heaton is quick to dismiss those early songs. "It was always pretty poor," he says, even if he can see there was a peculiar alchemy in Cook's sense of musical fun being married to his own dour lyrics. "We tried playing a Housemartins song off the first album recently, and I said, 'I can't sing this, the lyrics are just awful.' They remind me of Bono. It doesn't sound like me."

When did he begin to sound like himself? "Well, I think success gives you confidence to express yourself," he says. "By the second album, I'd started showing more humour, maybe an influence from Morrissey. I don't think it's a particularly northern quality – I don't see any humour in Oasis's lyrics. But it might be that British music best expresses itself that way. A lot of people take themselves so seriously: they couldn't imagine injecting humour into a song. People go for a formula that's been done – girl meets boy, boy meets girl. I don't think I could write like that."

Does he have his own formulae? "Mmm," he nods with a smile. "And I look back and they're awful. I realise I was barking up the same tree for three albums." It is this, he feels, that was the downfall of the Beautiful South: "Success made me more conservative as a songwriter." He tells me how recently, having completed lyrics for a new album to be released next year, he realised they covered familiar ground. "I thought, 'You haven't moved on enough.' So I just scrapped the whole lot. I hadn't really done that before."

He tried again. "I thought, 'Be yourself but don't be the same self as your last album.' I think you have to write not just from different points of view but from different selves." I wonder when he learned this. "I suppose things gradually dawn on you all the time, even in conversations like this, because I don't talk about my lyrics ever and I don't do many interviews these days."

I ask if he feels precious about songwriting, as if simply talking about it might somehow lessen the magic. "I feel precious about it if anybody says, 'What's that song about?' I feel ashamed to tell somebody that. Maybe it just sounds stupid when it's explained. You can see a song on a piece of paper and it seems fantastic, but you hear it sung and it doesn't work. Otis Redding singing the simplest words can sound biblical. To explain it feels like the dumbest of all things to do.

"When I had my recent failure, I'd gone out of my normal process – I'd gone somewhere sunny to write. My rough plan is to go somewhere cold and miserable to write lyrics, and somewhere warm to write the music." He laughs. "When people say your lyrics are quite dark, well, it's simple. I go to Hull in the middle of winter to write them, and then to Gran Canaria in the summer for the tunes."

He warms to his cold-climate theme: "I nearly always go back to the same small bar in the same village. I don't know what they think I do, because I've had a few pints and I'm sitting there talking to myself." He laughs. "Get yourself into a good morose state," he advises. "And then it's like doing a really difficult crossword. The thing is to get the first clue – that's when you realise what this song is going to become. It's going to be something good, because you realise for the first time that, for the whole of your life, you've held opinions about this subject. And that's a really enjoyable part of the job. It's so beautiful. It makes me so happy when you do that."

He sees himself these days as "a sort of fallen giant" but is happy that the moderate success of his solo career has allowed him to experiment, to stretch himself, to hone his distinctive voice. "What do I think I'm good at?" he says. "I think I'm good at being myself. Pop music and rock'n'roll have traditionally reflected the world of the listener, but I think what's different about the British and pop is that we like people who are singing about themselves and don't care if anyone's listening." He nods and adds: "There's 1,001 bands singing anthems about other people. But I'm 50 years old: the songs should be about me. I have far too many interesting things to say."

• Paul Heaton plays the Golden Fleece, Porthmadog, Wales, 7 June, then tours until 23 June. The 8th and Greatest Hits shows begin at the Barbican, London EC2, on 5 July.