What if Charles Dickens had had no prohibitions on imagining the worst? What if the whole truth could have been told about what might actually have happened if Oliver Twist had stayed on in the workhouse? If Mr Bumble wasn't just an amiable sadist, but a paedophile who first groomed Oliver and then raped him?

If even the suggestion strikes you as outrageous desecration, well, that's probably the whole point of Melvin Burgess's new novel Nicholas Dane, a rough-edged updating of the Oliver story. If one of Dickens's raisons d'être was the exposure of social injustice, then Burgess takes up the baton with a vengeance, attacking the subject of sexual abuse in children's homes with his usual bracing demand that we not look away.

Fourteen-year-old Nicholas Dane lives with his mum Muriel in north Manchester. Nick isn't a bad kid; he's given to some light truancy, but is bright and fiercely loyal to his friends. When Muriel dies unexpectedly of a heroin overdose, Nick - through a not completely plausible turn of events - ends up at a care home called Meadow Hill. This shouldn't be the bad news it seems. Meadow Hill is run by Tony Creal, a man with a sparkling and sympathetic reputation. But even Creal can't protect Nick from the harsh beatings of Mr Toms, his house-master, or from the other boys in the home, even though Nick gives as good as he gets.

One night after a particularly bad beating, Creal invites Nick up to his flat and allows him to have a hot bath. The nights continue with cigarettes and beer, and Nick finds himself responding to Creal's unexpected kindness. Until a seemingly innocent hand on Nick's knee becomes a sexual assault before Nick is even fully aware of what's happening. When Nick tries to report the attack, Creal and two other men spend the night raping Nick into silence.

So far, so utterly horrible, and whatever your feelings about the appropriateness of this for teenagers, Burgess has tapped into real terror here. The first half of the book is a deeply harrowing depiction of institutional paedophilia. Burgess is also sharp on the psychology of the male rape victim. One of Nick's biggest fears is not that he'll be raped again, but that Creal will talk about the rape out loud and that he'll die from the shame.

There are problems, though. Nick escapes Meadow Hill, and Burgess then spends another 200 pages sticking too closely to Dickens, rounding up his own Fagin, Nancy and Bill Sikes. The sexual abuse story fades badly into the background, and when it does finally return, it does so in a way that is both anticlimactic and feels like a failure of nerve from one of the nerviest writers around.

There is some sloppy writing and plotting, too, and aside from Muriel's friend Jenny who makes some effort to save Nick, the female characters are unreadable. Fellow lost teen Stella, who initially shows some spark with Nick after he escapes, settles into being merely a passive abused girlfriend who meets a gratuitous end. Likewise, Burgess's attempt at a Dickensian grotesque in social worker Mrs Batts, with her careless evil and Jean Brodie accent, is a joke that never comes off.

Much of Nicholas Dane feels like a real, personal attempt to reckon with a deeply uncomfortable but necessary issue, told in Burgess's grimly unsparing voice. What he hasn't done, however, is successfully fit it to a story which services that intention. A reader, perhaps especially a teenage one, will feel properly upset at the horror, and then dismayed as that horror dissipates into something more muddled.

 Patrick Ness's The Ask and the Answer is published by Walker Books.