I first read David Peace in 1988, long before he was named among Granta's best young British novelists, before his Miners' Strike chronicle GB84 won Scotland's James Tait Black prize, before the epic TV adaptation of his Yorkshire noir breakthrough Red Riding, before he turned his gaze on the bleakest criminal outrages of his adopted Tokyo home, before The Damned United became that rarest publishing phenomenon - the word-of-mouth bestseller - and before his new novel Red Or Dead was hailed as a masterpiece.

My original encounter with his writing happened in a corridor at Manchester Polytechnic in year one of our English degree course. We'd bonded over a shared love for the neglected Mickey Rourke movie The Pope Of Greenwich Village, become friends, and I was collecting a literary criticism essay of his from the students' pigeonholes. En route to the pub, my eyes drifted to the small, neat black ink on the top page and an opening sentence that included a joke combining noted Canadian academic Northrop Frye and the then dominant rave culture. Two things struck me. First, that this was writing, an authored, argued piece as opposed to a by-the-numbers 2:1 magnet; and second, that it wasn't frightened of alienating the tutor - the essay was, in short, uncompromising. In the 25 years since, that may remain the defining constant in David Peace's life and work.

Post graduation, when most of his peers were drifting into casual employment or embarking upon careers, David treated writing as a job. In a pre-laptop and latte world, he knuckled down behind the tiny grey screen of a Canon Starwriter word processor in rundown Rusholme and worked: there were novels (Chorazina Revisited placed the Gates of Hell in Blackpool), stage plays (Restoration In Red began with Charles II singing Tom Jones's I'm Coming Home), film scripts (a hallucinatory re-imagining of Scooby Doo - entitled Scooby Don't - received a response from Hanna-Barbera that was less rejection letter, more cease and desist order).

What at the time seemed like setbacks now feel more like a writer learning self-discipline, learning to put in the hours - and it was a period which culminated in a writer finding, if not his voice, then certainly his modus operandi. The screenplay Roman (aka Silent Walks) centred on the life of Roman Polanski in the aftermath of Sharon Tate's murder, and established the Peace blueprint: focus on an actual incident and examine, explore, extrapolate - zero in on the real people involved and get under skins, inside heads.

Armed with this strategy and a TEFL qualification (even starving artists gotta eat) David left Manchester and headed east, initially to Istanbul (I called his hotel reception and read him the Ceefax report announcing Kurt Cobain's death) and then on to Tokyo. Teaching in Japan offered reasonable income, flexible hours and time to begin a new novel - or novels, because from the start 1974 was intended as the first of a series, the Red Riding Quartet, which would revisit the criminal history of a childhood spent in the shadow of the Yorkshire Ripper (he'd bunked school to stand outside Dewsbury Magistrates's Court when Peter Sutcliffe was charged). A bold move for an unpublished novelist but one which paid off when the novel was picked up by Tokyo-based The English Agency and, specifically, its founder William Miller.

"From the start, William acted like I was the greatest writer in the world," Peace recalls with a smile that even the vagaries of video calls and conflicting time zones is unmistakably bittersweet. Miller died in 2009, by which time he'd retired as David's agent but remained a beloved friend and a grandfather figure to the author's two children.

"I thought about him a lot writing the new book, because that was one of Bill's great gifts: he made relatively unremarkable players believe in themselves, and he made good players believe they were great."

The 'Bill' in question is, of course, Shankly, very much the hero of Peace's new novel, but the use of the Christian name only is telling. This is a protagonist for whom the author feels respect, affection, even love.

"I just think the way he lived his life was incredibly admirable. He was dedicated to his work, dedicated to his family, he was a socialist, he wasn't at all concerned with material possessions - he didn't see the need for anything beyond a roof over your head and food on the table."

It would be easy to use these values as a stick with which to beat the gaudy, cash-stuffed piñata that is the modern beautiful game, but Peace is aiming for a broader resonance: "The wider society has the same problems as football, the wider society could learn from Bill's life."

With Red Or Dead stretching beyond 700 pages and spanning more than 20 years, there is a lot of life from which to learn, but this wasn't always the author's intention.

"Originally I was going to start with the resignation and write just about the retirement," he says, prompting thoughts of the predetermined time period (Brian Clough's 44 days at Leeds) which served The Damned United so well. "But how can you write about retirement without writing about the man's work? Once I started to research the man's work, I knew that had to be the bulk of the book."

A s ever, the research was exhaustive and immersive - dozens of books, ranging from footballers' biographies to Edwin Morgan's Sovpoems (Shankly felt an affinity to the indefatigable citizens of the USSR) to Robert Burns, to whom Peace already had a sentimental attraction. "William would often loudly recite Burns when in his cups," he remembers with a grin.

He abandoned another resource early in the process, however. "I bought lots of Bill's favourite music, and Mario Lanza is okay, but there's only so much Pat Boone and Kenneth McKellar you can take."

Instead the soundtrack to his day became the voice of Shankly himself. "John Roberts, who had co-written Bill's autobiography, gave me their interview sessions, the original C60 cassettes. Hearing those, hearing Ness [Mrs Shankly] bring them a cup of tea, hearing their grandkids pop in - it was invaluable, really."

Spending the working week increasingly, hypnotically enthralled by Shankly began to spill over into his own family life. "Every Sunday I would Skype my father and read aloud what I'd written to him. I wanted to make sure that I'd done enough, that it was good enough. And my dad is - like Bill - retired and - like Bill - still wears a collar and tie every single day."

Seeing his late agent William and the very-much-still-with-us Basil Peace share characteristics with Shankly seems to have increased his appreciation for these three men and fuelled his desire to honour them all.

This need to be worthy of his subject is there in every word of the finished book, and it's evident in the misty eyes and cracked voice he can't hide when discussing a glowing endorsement from a surviving member of the Shankly family. "I just wanted to do right by the guy," he shrugs, composure regained.

I was at Anfield for last Saturday's Steven Gerrard testimonial match, taking my two young children to their first Liverpool game - ("Will it be louder than Partick Thistle, dad?") - and we made the pilgrimage to the Hillsborough Memorial, situated adjacent to the gates named for Shankly.

Red Or Dead ends almost a decade before that grim day in Yorkshire but the tragedy is foreshadowed - when the fences go up, when the fans are demonised, and in a chilling description of the Ibrox stadium disaster. And I thought of the emails David and I swapped last September when the independent report was made public, when David Cameron unreservedly apologised to the victims and their families - his eloquent fury, our impotent rage. I thought that much as Hillsborough and the ensuing, enduring calumny and conspiracy exemplify everything that is bad in these islands, so Red Or Dead celebrates everything that is (or could be) good. Shankly did more than build a football club: he created a mythic self-image for an entire city and, beyond that, a worldwide community of supporters, and David Peace has done more than "right by the guy". He has done his subject justice.