[In the following review, Sage describes Dunedin as “exuberant, cruel, depressed and hilarious by turns—a manic-depressive book, all ups and downs.”]

The street-theatre of “community care” and the brand-new towering monuments to recession have inspired some interesting London novels, from Michael Moorcock's carnivalesque Mother London to Penelope Lively's brittle, see-through City of the Mind—but none has quite the high-spirited style of Dunedin. Shena Mackay writes about South East London with such penetrating familiarity and ingenuity that it becomes the focus for a whole world of dreams and disasters and guilty histories. And it is done with a special lightness of touch that lets you levitate out of the horrors, without in the least obscuring them. Here, for instance, is bad-tempered, menopausal and witty Olive Mackenzie, simply getting from A to B, sometime in 1989.

She drove past buildings faded like old music-hall queens, raddled, with dust in the folds of their skirts and broken fans, past people hitting their children while waiting for buses that would never come. Rain hit the windscreen, and at once it, and the road, were full of what they used to call dancing dollies; silver spirals pirouetting on glass and tarmac.

This kind of openly artful—but none the less easy-going—writing, which doesn't feel embarrassed about similes, and pounces on any chance association that promises pleasure, marks out Mackay as a traditionalist. She reminds one just enough of Dickens, and (at different time) of Iris Murdoch and Angus Wilson, to call up a rich receding background of fictions of society, leading up to her own.

Indeed, a severed head broods symbolically over the action—a Maori shrunken head in a biscuit tin under the floorboards of a derelict mansion called “Dunedin”, both house-name and head commemorating a shaming and abortive colonial excursion by the Mackenzie family, when grandfather Jack, the preacher, took them all the way to New Zealand, only to be sent back for blotting his copybook with the part-Maori laundress, Myrtille. The novel's first and last sections are set back in that brief antipodean idyll, and act as a sunlit and ironical frame for the lives of the present generation. Jack Mackenzie's grandchildren, official and unofficial.

Once upon a time, the British went out into the world with outrageous colonizing confidence; now, the wide world washes up here, like flotsam and jetsam: we're back “home”. The Mackenzies, as it were, anticipated this receding, homecoming tide of ex-empire by being chucked back in, eighty years ago. Divorced Olive and her brother William—an ex-headmaster disgraced when one of his pupils was killed on a school trip—look set to be “the last rotting fruit on their branch of the family tree”.

But, true to the tradition she's working in, which generates elaborate and endlessly proliferating plots. Mackay produces one surprise after another; a baby out of a hat here, a lost young life there. … Decay is after all a form of life, and what look like the last days of London from one horrific angle are the first days of new sorts of life from another. Not that things “balance out”, at all. Under cover of curiosity and humour, she is a relentless moralist, and juxtaposes moments of euphoria with black hopelessness and violence, just to make the point that there is no common denominator—no way of sharing out either happiness or suffering. Dickens, defending the melodrama of Oliver Twist against supposed-realists, said that actually city life was like streaky bacon, and Mackay, I am sure, would agree. Her characters are at once ordinarily plausible and on the margins of nightmare, and she demonstrates brilliantly how little divides daily looniness from the kind of thing you read about in the newspapers (both Olive and William get into the papers in the course of the story). Then again, there are the things too terrible to be in the papers, yet.

Perhaps the most obvious sign of the novel's slyness and ambition is its excursion into dystopian “fantasy”, in the form of a secret concentration camp for vagrants, run by the Department of the Environment. Can we be sure? you're meant to ask yourself. Also, this strand of subplot is a reminder that for all its connections with past novels. Dunedin is not at all comforting. Instead, it is exuberant, cruel, depressed and hilarious by turns—a manic-depressive book, all ups and downs.

There is space in this formula for a lot of supposedly “minor characters”, including a couple of very nasty pen-portraits of the kind of writer Shena Mackay isn't; Terry Turner and Derek Mothersole, who vie with each other in trendiness, coolly pornographic when it suits, “caring” when that's in vogue, but never able to lose themselves in London, as this book can. It's a small but sufficiently savage authorial gesture on behalf of openness, which should not be mistaken for ease or cosiness. You need, in fact, to be on the edge of hysteria to cope with what she calls—in a nice portmanteau pun—these last days of “empirical follies”.