Add the sugar to the butter and beat again until it is light and fluffy.
Whisk the egg in separate bowl with a fork and then add gradually to the butter and sugar , beating all the time.
Add the flour and vanilla essence. Mould the mixture into a bowl with your hands.
Lightly flour the work surface and roll out the dough until it's about the thickness of a one pound coin. Use cutters to make shapes. Lift on the baking sheet.
Bake the biscuits for 8 - 10 minutes at 190c/375f/gas mark 5. Leave to harden for a couple of minutes , then put on a wire rack to cool.
For the icing , sift the icing sugar into a large bowl and gradually add enough hot water to make a soft , firm mixture -about 2 - 3 tablespoons.
Divide the icing into 3 or 4 bowls and add 1/2 tablespoon of colouring to each the one. Be careful not to mix the colours! Spread the icing onto the biscuits with a table knife and decorate with sweets or sprinkles