A tale fashioned from sturdy strands

FICTION: PATRICIA CRAIG reviews The Children’s Book By A.S.Byatt Chatto Windus 614pp £18 99

FICTION: PATRICIA CRAIGreviews The Children's BookBy A.S.Byatt Chatto Windus 614pp £18 99

IN THE EARLY months of 1903, E Nesbit visited the British Museum in search of inspiration for her next children's book. While she was there, she talked to E Wallis Budge, the Keeper of Egyptian and Assyrian antiquities, and as a result The Story of the Amuletwas published in 1906 and dedicated to Dr Wallis Budge. The Children's Book, AS Byatt's compelling new novel, takes this visit as its starting point, but relocates it to the South Kensington Museum – not yet the VA – moves it back some years to 1895, and creates a distinctive character, Olive Wellwood, to fit the Nesbit role.

This is typical of the way – the fascinating way – The Children's Bookkeeps homing in on aspects of Nesbit's biography and then sheering away from them into a densely imagined, wholly fictional realm.

The book opens in the South Kensington Museum. Two boys, not yet friends, are regarding with interest and a bit of self-righteousness the activities of a third who appears to have entered the museum illicitly, and sits sketching gold and silver treasures in a glass case.

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The first boy is Tom, Olive Wellwood's son, the second is Julian, son of Major Prosper Cain, Special Keeper of Precious Metals, whom Olive is consulting in connection with her current researches, and the third, ragged boy is Philip Warren, a runaway from Burslem and potential potter of genius. Philip is the element in the novel that approximates most closely to a Nesbit plot, rather than E Nesbit's life: just as a kind lady takes in Dickie from Deptford in Harding's Luck(1909) – or in the spirit of David Copperfield's arrival at Betsy Trotwood's, as AS Byatt has it – Philip is swept off by Olive Wellwood towards the sanctuary of her home, where a proper meal, clean clothes and a bath effect the beginnings of a transformation in the youthful vagrant.

The home to which Philip is transported is an old Kentish farmhouse, named Todefright, tastefully modernised in an Arts and Crafts style. Like Nesbit’s Well Hall, Todefright accommodates a houseful of adults and children whose relations with one another are not quite as straightforward as they seem.

And AS Byatt has devised some additional complications to augment the original Well Hall set-up, the ménage à troisconsisting of Nesbit, her husband, Hubert Bland, and a friend named Alice Hoatson. (Their counterparts in the book are Olive, her non-monogamous husband, Humphrey Wellwood, and her sister Violet.)

"Nothing was what it seemed," thinks one of Olive's daughters, Dorothy, at a critical moment, sparking off an Alice-Through-the-Looking-Glassreflection as Byatt's recurring children's-book motif comes into play once more. Not only Alice, on the other side of the mirror or underground, but Lost Boys (and girls – eg Perdita), "aproned hedgehog-women" à la Beatrix Potter, Borrowers, Seekers, Mother Goose, Toad Hall and all add a decorative element to this long, clear-sighted and evocative work of fiction. E Nesbit herself is mentioned on page 398.

The Children's Book, though, is far from being a children's book. Beyond the playfulness, the idyllic midsummer gatherings of friends and relations, the masques and balls and little tree houses, the avant-garde arrangements, the impulses to do good to society and to individuals – beyond all these, darker issues lurk, pervasive and often unspoken. War and poverty, the exploitation of workers, feminist disaffection, irresponsible seductions, all kinds of child abuse. Enchantment and wonder, yes, but also a flicker of an ambience of What Maisie Knew; the best of times but also Hard Times.

AS Byatt has always been drawn to the novel of ideas, to a 19th-century expansiveness and formality, but filtered through a sensibility distinctly of the present; and in The Children's Bookshe marshals a large cast of characters and follows their interlocking stories with style and astuteness. At the same time, she gets to grips with plentiful anxieties and confusions of the age, with burgeoning ideologies such as Fabianism, Anarchism, Suffragism, women's education, with the Edwardian enthusiasm for varieties of antique Englishness and nostalgia for a Never Never land.

With its vivid topical detail, its mingling of history and fiction, fantasy and documentation, allegory and actuality, biography and invention, allusion and innovation, The Children's Bookis strenuously inclusive and also tremendously enriching – an intricate tale, energetically fashioned from sturdy strands of material, by "a spinning fairy in the attic", an indefatigable storyteller, which is never less than the real thing.

The Children's BookBy A.S.Byatt Chatto Windus 614pp £18 99

Patricia Craig is an author and critic. Her most recent book is a memoir, Asking for Trouble, published in 2007