The muses descend on N16

Of all the terms that might apply to the area where I grew up, "festive" is the least fitting. Stoke Newington in the early Elizabeth II era was the nadir of mundanity, a dormitory district for City trudgers and the slower middle classes, interspeckled with bomb sites, muddy greenery and prefabricated houses.

For East End immigrants and cockney wide boys, it was the first way-station on the path to greenbelt prosperity. Glamour and art were antithetical to its purpose. Daniel Defoe, we were taught, grew up in a two-up, two-down off Stoke Newington Church Street, dreaming (as I did) of escape to a desert island. Edgar Allen Poe recalled his Manor House schooldays in a powerful story; JB Priestley set his much-loved novel, Angel Pavement, in our drab streets. These were the nearest London N16 would ever get to creative ferment.

But what's this on the web? A Stoke Newington Festival is coming up next month, fizzing away for the ninth successive year with string quartets and circus acts, fine-art commissions and free salsa lessons, happenings in Abney Park Cemetery and family midsummernight sleepouts in Clissold Park.

Something about these eclectic attractions strikes a chord - not a nostalgic twang, since few who fled Stoke Newington are ever tempted to return. But running through the programme are hints of a utopian ideal abandoned by Salzburg, Edinburgh and the summits of the festival industry, the aim of expressing the spirit of a place through the character of its inhabitants. Stoke Newington has a magnificently diverse, constantly shifting community. The notion that people can come together from four corners of the earth to make art in this dull backyard is so close to what festivals ought to be about that I rush down to see for myself.

First stop is lunch with the director, Chris Westwood, who, like most in N16, comes from somewhere else. Westwood once invented a tented city at the Adelaide Festival for writers and readers, a feature that was copied on three continents. Most arts festivals ape one another, blurring any pretence at individuality.

Westwood arrived in January to be told that Hackney, the most miserable borough in Britain, had halved her grant. With just £35,000 from the council and £32,000 from London Arts, she cut deep into her plans. Worse was to follow. An all-day arts and food fare on traffic-shut Church Street, with an expected 50,000 attendance, had to be cancelled when the council demanded 80p a head as a peculiar "licence fee".

Searching for a cheap venue, Westwood alighted on Stoke Newington Town Hall, a gorgeous art-deco edifice that, in Hackney's hands, has fallen into near dereliction. You can use it, said the council, provided you restore it first. And that's where the festival spirit kicked in. Some 200 people volunteered their labour - plumbers, doctors, engineers, Asian mothers, itinerant backpackers. With a gritty resilience unwitnessed since the Blitz, the people of Stoke Newington are reclaiming their aptly-named Assembly Rooms and are bringing them back to life as the festival's hub.

Arab muezzins will share a bill with Jewish cantors. Turks and Kurds will exchange maqams beneath portraits of gowned aldermen from empire days. The heavy-metal mob of north-east London will put on nights of grimy noise. The basement cloakrooms are being turned into an art installation. The bars will serve Thai beers. "If there's one thing this borough needs," sighs Westwood, "it's food for the soul."

The town hall, still smeared with traces of anti-aircraft camouflage paint, matters less to me than the place next door - the imposing public library with its bust of Defoe and solemn oak-lined walls. Here, aged five, I developed an erotic fixation with lady librarians who, to my mind, represented the supreme source of knowledge, power and pleasure. Lamentably, the oak cladding is now concealed behind plastic partitions, the mighty dome obscured by a functional false ceiling. Tacky to the eye, Stoke Newington library has lost its capacity to inspire.

Wandering out into pouring rain - it always rained in N16 - I cross the 17th century graveyard that I used to traverse alone, after dark, on my way home from primary school. There was not much to fear in those days, except getting lost in a choking smog.