Time gentlemen, please

The big man in the figure-hugging rainbow dress went flying. His wig was slipping off to reveal sweat-soaked, thinning hair as he lay there on the drizzled pavement, bare legs splayed, laughing and screaming, "Cheat!" The Gentleman's High-Heeled Egg & Spoon Race, traditional curtain- raiser to Mardi Gras, was over.

"Polly" got off the ground and staggered in last, to cheers from the crowd outside his own bar, Manto - but he was man enough to take the microphone and hail the conquering hero, a shaven-headed man in grey T-shirt, jeans and stilettoes.

"That's it then," bellowed Polly, still half laughing. "Mardi Gras has started!"

As you read this the streets of Manchester will be full of drag queens, rubber boys, clones, diesel dykes and lipstick lezzies all having a scream at the largest lesbian and gay event in Britain. And with them, of course, will be thousands of quiet men and women who reject such crude stereotyping and are painstakingly discreet about their sexuality all year round - except for Mardi Gras weekend, when you'll find them dancing on the tables in rubber or flouncy tutus.

Even the straight folk who go to gawp find themselves acting outrageously. After half a dozen pints some of them even end up snogging someone of the same sex. When up to half a million people watch the grand parade through the city centre it becomes hard to move without bumping into a banana on a Carmen Miranda hat or having your eardrums burst by a whistleblower.

They're not coy about these things any more in Gaychester, where a rainbow flag flies from the gothic heights of the Town Hall. Inside the walls are lined with portraits of sombre aldermen, who would have blushed under their mutton whiskers at the thought of hosting last night's lavish Lavender Ball. The star guests were due to include the Beverley Sisters, Bonnie Langford and local heroine Julie Hesmondhaigh, the transsexual Hayley in Coronation Street.

Mancunians know their city council would bid to host the opening of an envelope if it brought in jobs and money. The Olympics went to Sydney but Manchester will host the Commonwealth Games in 2002 - and it has suddenly hurdled London to become the Gay Capital of England.

The Gay Village, a square half-mile of bars, restaurants and clubs that has grown up in the past five years around Canal Street - or Anal Street as the graffiti artists inevitably have it - provides a gathering point for at least 300,000 gay men and women in the Greater Manchester area, and as many as two million across the North West. Mardi Gras, its annual celebration and fundraiser for Aids charities, will bring in at least pounds 15m to the city this weekend. Small wonder, then, that Newcastle and others are now openly talking about following Manchester's lead and promoting specific gay quarters to attract the pink pound.

"Any asset of the city has to be exploited for the benefit of all its citizens," said the Lord Mayor of Manchester, Tony Burns, when it emerged that a company was marketing the city as a holiday destination for American gays. "This is sensible business."

But almost 90 per cent of people who responded to a telephone poll by the Manchester Evening News disagreed with him. Councillor Pat Karney, who is in charge of managing the city centre, agrees that the ruling Labour group has to be careful not to disenfranchise those who'd never dream of visiting the Gay Village.

"They think it has a Sodom and Gomorrah atmosphere. It has been exaggerated in their heads by such massive media attention. Secondly they think we put some public money into it, which we don't, and we never have done. There is always a risk when you stand up for equal rights for everybody."

The prettiest boy in the world stood beside me, flawless skin stretched across glacial cheekbones, but not even he could get a table in Velvet on Mardi Gras weekend. The upmarket restaurant, which is running its own absinthe bar this weekend, had a goldfish tank in the stairwell. Above each stainless steel urinal in the toilet was a small screen showing the shopping channel, which was offering a Revlon nailcare kit.

"The lesbian and gay experience here is less metropolitan, more friendly, more local, more communitarian," said Ian Wilmott. "It is less anonymous."

It is hard to imagine the 40-year-old Wilmott wearing camouflage trousers to the office when he was a senior manager in local government, but now he is the event co-ordinator for the Mardi Gras. Born and raised in the East End of London, he moved to Manchester two decades ago. Its status as the powerhouse of the industrial revolution had given his adopted city a sense of itself as innovative, self-sufficient and distinct from London, he said. Its gay community had a proud heritage.

"There has always been a tremendous amount going on here, and a degree of tolerance and openness. The Campaign for Homosexual Equality, the very first lesbian and gay rights group in the UK, was born in this city. In the Forties there were what we would now know as gay or transvestite bars. There was massive opposition to Section 28 here in the Eighties, supported by the council. Manchester is not big enough to have an Earl's Court and a Soho, it can really only have one point of focus, and Canal Street has become that."

Apartments in the area can now cost up to a quarter of a million pounds, but only a decade ago it was run-down and ignored. "It was a prostitute area, on the margins of the city, and the gays flitted in through the twilight. The commercial process has turned that area into a glittering powerhouse of the economy. It's like the Monopoly Board, but Old Kent Road got the houses on very early. It's the place to be."

The transformation began properly in 1994 with the opening of Manto, which was glass-fronted and bold. "It was about a new vision of being open to the world. We weren't hidden. It wasn't knock three times and ask for Nellie."

The second significant bar to open was Metz, a tasteful diner right on the canal, which advertised its intentions with the slogan: "Don't discriminate, integrate.. These days straight couples can be seen dining by candlelight next to transvestites.

Wilmott believes the Gay Village has fostered a new sense of belonging among lesbians and gay men that is unique in Europe. "The diaspora of lesbians and gay men across the North West see this as almost like their Promised Land, it's their one bit where somehow their lives and expectations and aspirations can be played out."

The trouble is that the Gay Village is growing faster than the community it serves - which means companies need to attract other sorts of customers. "I was walking down Canal Street and got pushed out of the way by a straight couple who obviously weren't gay-friendly, and they called me a big fat lesbian," said Adele Fannon, better described as thin and beautiful.

Others talked of hiding their pledge bands as soon as they go outside the square half-mile of the Village, for fear of being beaten up. "You can be lulled into a false sense of security," said Iain Macdonald, who was visiting from Edinburgh. "We mustn't forget that in other cities gay bars still have frosted glass, we have to hide away as if we were doing something wrong."

Macdonald was curator of the Aids memorial quilt exhibition in Campfield Market. Walking through this reminder of the sadness that provoked Mardi Gras

in the first place it was hard to hold back the tears. Embroidered testimonials that said "with love from mum & dad" as though they were a birthday card hung next to a green quilt that bore the name Michael. The surname was covered by black material. "Your last name is sewn underneath the strip," someone had written. "Perhaps one day your family will re-learn their pride in you and allow it to be shown. Until then you will be known by these last names: Michael the Class Act; Michael the Kind; Michael the Smile; Michael the Missed."

HIV and Aids hit the lesbian and gay community in Manchester hard in the mid to late Eighties, and in 1991 those who congregated around Canal Street decided to raise funds to help care for the sick and dying. It was more like a jumble sale than a carnival, but as the Village grew so did the event. One year the theme was Mardi Gras, and it stuck.

Sponsors like Bacardi and Grolsch now help to fund an event that costs pounds 400,000 to run. Pledge bands are sold instead of tickets, with some of the proceeds going to charity. Last year pounds 131,000 was raised for HIV and Aids charities in the North West, paying for full-time workers and thousands of free condoms.

As with the London Pride event, which was renamed Mardi Gras this year, some believe the festival should be more political. The performance artist Chloe Poems, a 37-year-old man in a gingham dress who wears diamante-spangled boxing gloves on the cover of the latest edition of the listings magazine City Life, said: "Mardi Gras will be another huge disappointment for those people with a conscience. For those who just want to get off their head, however, it will be a great success."

On Canal Street close to midnight a muscular couple were kissing fully and frankly. The young hardbody crowd were drinking Red Bull and Indigo in Manto; the Rembrandt pub was full of older men in loose tropical shirts with pints. Queues were starting to form for fried chicken from McTucky's - "You can always tell how bad a night it was if you wake up and the only thing you remember is going for a McTucky's," said Davey, a chartered surveyor from Cheadle. A black boy in white muslin and a white boy in black sang as they came skipping down the road, hand in hand.

And so to bed. But Mardi Gras fever had even spread to the Palace Hotel, a Grade II listed building with a bronze staircase and a clock tower over 200 ft high. Its magnificent marbled reception hall was dominated by a huge Mardi Gras display featuring gold lame and pink feather boas.

"We don't have that up all the time," said the receptionist, giggling and shimmying her shoulders like people do when they're pretending to be camp. "We thought they would appreciate some pink featherage."

The porter in his braided uniform said the hotel would be full this weekend. "But it won't be too much work ... they're never in their beds."

TIME TO PLAY IN MANCHESTER

Main Stage (Bloom St): 2pm to 10pm, live performances from The Brand New Heavies, Cleopatra and Honeyz. Free with a pledge band which costs pounds 10 (proceeds go to charity).

Upper Campfield Market (corner of Deansgate/Liverpool St):12pm to 9.45pm, Aids memorial quilt exhibition.

Viva Women's Area (Bloom St): 2pm to 2am, a women and children only chillout area.

For information call Manchester Visitor Centre (tel: 0161 234 3157/www.mardigras.org.uk)