BOOK REVIEW / Oliver's new twist is no laughing matter: Sugar cane by Paul Bailey Bloomsbury pounds 14.99

PAUL BAILEY's odd and always memorable tragi- comedies are peopled by characters who survive grim childhoods by the skin of their teeth. The eponymous narrator of Gabriel's Lament survived life with his grotesque father, Oswald - an unfailingly opinionated social climber and homophobe with a pathological aversion to suede shoes - and the belated discovery that his mother had not, as he believed, simply run away, but committed suicide by swigging bleach. We can be sure that Gabriel survived, because here he is again, loitering contentedly on the margins of this new novel, scar tissue manifest only in his inability to make love to his mistress, Esther, without first putting on a woman's frock.

Esther Potocki, Sugar Cane's narrator, is tolerant of Gabriel's foible. Her job as a venereologist ('I work with human genitals' is the book's unignorable first line) has rendered her unshockable; besides, in love and pregnant for the first time at over 40, she is in benign mood. Vignettes from Esther's past - lonely childhood with ludicrously snobbish mother, failed marriage to an alcoholic - are woven into the novel, but the main narrative belongs to yet another young victim of lovelessness and cruelty, the fey and enigmatic Stephen Eccles.

Esther first notices Stephen at the bedside of a patient in the hospital where she works. He brings her unlikely, probably stolen presents - ivory opera glasses, a bust of Mozart - but what he wants in return is unclear. Esther takes him to meet her lover, but soon afterwards Stephen disappears, leaving one last gift for his 'Doctor Lady and Mr Gabriel' on which he has recorded his life story.

Bailey's debt to Dickens - the narrative vigour, extravagant characterisations, fascination with the city and risky juxtaposition of pathos and broad comedy - have been evident before, but now he goes the whole hog. Stephen's story is Oliver Twist, recast for our times. Stephen was a teenage runaway, exchanging a wretched home in Halifax for the promise and danger of London. Taken under the wing of the street-wise Anthony (Tonio), he is introduced to the wholly bogus 'Bishop of Wandle', installed with Tonio and a clutch of other waifs in the Bishop's 'palace' (a disused furniture depository by the Thames) and schooled in depravity. If Stephen is Oliver, Tonio is his lovable Artful Dodger, showing him how to operate the public lavatory at Piccadilly Circus with minimum risk and maximum profit. The 'Bish', a spectacular amalgam of Fagin and Mr Bumble, all wobbling flesh and gross appetites, is the nefarious master of boy whores and ceremonies.

Just as monstrous Oswald stole the show in Gabriel's Lament, so the Bish and his lurid lair dominate this novel. But there is a problem: exactly how funny, even darkly funny, can child prostitution be? Bailey imbues the palace scenes with a kind of vaudevillian playfulness. The acolytes speak in a quaint demotic in which 'dopey' and 'good old' replace expletives. The Bish makes them perform nightly 'sausage duty' on his randy, recumbent form, and orchestrates games of 'Naked Knowledge' for the exquisite pleasure of seeing their silky young bodies 'in the lovely, lovely buff'. He wedges his bulk into a confessional box to listen, with masturbatory delight, to blow-by-blow reports of their professional encounters. Even Stephen's unstintingly graphic reminiscences about his first humiliations as a rent-boy have a childish, pantomimic and therefore peculiarly harmless quality - not pretty, certainly, but not really the 'descent into hell' Esther calls them either.

Yet real and terrible harm is precisely Sugar Cane's subject. Tonio's eventual death from Aids and Stephen's alienation and emotional retardation are not laughing matters, nor meant to be. The discordance between the near-hilarity surrounding the causes and the horror of the effects - effects all too familiar from real-life 'missing' posters and gritty TV documentaries - makes for disquieting reading.

There is no denying the colour, warmth and sheer story-telling energy of this novel, but it leaves a strange after-taste. It is as though Bailey's head knows all about the real ugliness of evil, but his kind and humorous heart won't quite let him address it.