QUESTION: Is it a privilege for an Indian- born businessman to be called "Sooty" by the heir to the throne of Great Britain? The answer, if you were to believe Mr Kolin Singh Dhillon, is arguably: Yes.The nickname has long been a staple feature of the upper-class who consider it a term of endearment to banish Christian or, for that matter, a Sikh name and replace it with a term such as "Biffo", "Pongo" or "Stink".

So stranger would carry a racial sting, and could carry a jail term for racially aggravated breach of the peace? For Mr Dhillon, who arrived in Britain from the Punjab with his parents at the age of four and has built himself into a wealthy man.

A pillar of the community and the cornerstone of the private Cirencester Park Polo Club, it is a tribute to how far he has risen in British society that his friendships extend to a future King, who is comfortable enough in his company to playfully refer to the colour of his skin.

The controversy and public condemnation that has greeted the revelation that Prince Harry had used the term, "my wee Paki friend" about a fellow soldier for which he had promptly apologised now threatened to engulf his father but, instead, quickly receded. So was the issue as much about class as race? As one member of Cirencester Park said this week: "I suppose we all see it as a sort of running joke about political correctness."

But the question remains: who is the joke on?The genesis of Mr Dhillon's nickname extends back to the early 1970s and was used by Camilla Parker Bowles, when she was married to her first husband, Andrew, who was also a popular figure in the polo world. Mr Dhillon insisted this week that the phrase carried no sting or slight: "I enjoy being called Sooty by my friends who I am sure universally use the name as a term of affection with no offence meant or felt."

As one friend said this week: "He is utterly bemused by all of this. People have been calling him Sooty for so long he did not even notice."Yet for some members of the public the scenario will smack of an outsider being admitted into an affluent inner circle but one whose stiff price of entry is to have any difference from the traditional set perpetually pointed out.

Dr Asifa Hussain, a lecturer in politics and management of race and ethnicity at Durham University said it was unfortunate that Mr Dhillon had put up with the nickname. "I wonder if it is the price of admittance into that world? But the Royal Family should reflect and represent us and using terms and language such as this is not helpful. Royalty is usually governed by etiquette and language like that does not make people comfortable."

''Utter rot,'' insists Ingrid Seward, the editor of Majesty magazine who explained: "I do think it is the most ridiculous issue and has been blown out of all proportion. Everybody calls each other by nicknames . Kolin has always been called 'Sooty' by everybody, it is just his name. He doesn't mind. The whole thing is so ridiculous that it is just not worth discussing. You only call somebody by their nickname if you are affectionate towards them – so it is a totally affectionate term. Perhaps it's a public school thing where everyone has a nickname."

The Royal Family, like any ordinary British family, has members who make the occasional racial faux pas, with Prince Philip regularly spluttering out comments . Who can forget his bon mot to a British resident in China: "If you stay here much longer, you will go home with slitty eyes." Or his remark to a British student in Papua New Guinea two years later: "You managed not to get eaten then?" Even our European neighbours have not escaped his stereotypical views, while chatting to a British tourist in Budapest he said: "You can't have been here that long – you haven't got a pot belly."

Then there was Princess Michael of Kent who, while dining in a New York restaurant in 2004 was irritated by the loud noises emanating from a table of black New Yorkers, so she turned around and said: "You need to go back to the colonies". A spokesman for the princess later said: "She did not make a racist comment".

A few days later, writing in the Los Angeles Times, the British columnist Gary Younge explained: "As far as the princess is concerned, this is probably true. For the most part, the British upper class would not recognise a racist statement if it ran up and stuck a burning cross on their lawns ... Princess Michael's comments are entirely consistent with the mindset of a nation and a class that has been marinating in post-colonial nostalgia for half a century too long."

So, is Prince Charles perpetuating such "post-colonial nostalgia" by using his friend's nickname? The irony is that it is hard to think of a member of the Royal Family who has made more effort to embrace multiculturalism, even to the point of requesting that when he becomes King his title change from "defender of the faith" to "defender of the faiths".

William Dalrymple, the author of The White Mogul said: "I think it's a question of changing modes and fashions of behaviour, not class. Attitudes to racism have changed very markedly in the last 30 years and all sort of terms and stereotypes which were regarded as perfectly acceptable in the 1970s now seem highly offensive. Nicknames like Sooty were perfectly common in the a world that had Black and White Minstrels, On the Buses and Robinson's jam Golliwogs – but now seem outdated and deeply hurtful. I don't think it's about class.

"I can't answer for Mr Dhillon, but I suspect it's not a class thing so much as a 1970s thing – there are fashions in race relations and racism just as there are fashions in relations between the sexes and sexism. The sexism of a 1970s James Bond film can make us wince now, but went unnoticed at the time. So with nicknames like Sooty."

Upper class society has rules governing the use of nicknames and while Jo Bryant, the editor of Debrett's A-Z of Modern Manners, said she did not wish to comment on Mr Dhillon's nickname or its racial nature she did insist that any nickname should be treated with caution. "Whether you use a nickname depends on how close you are to a person and how informal you wish to be. You must, of course, be careful with the use of hurtful terms and be careful not to use a person's nickname that you have heard third hand."

While there are many who would wish to see a nickname such as "Sooty" dropped, there are those who defend the use of language. Professor David Crystal, an expert on language, said this week that it may still be permissible to use terms commonly regarded as racist – when it is a joke between friends and used without malicious intent.

He said: "I don't think this is a matter of language change at all. The issue is of intention." The professor added: "I often encounter groups of people from a particular ethnic background who slag each other off using words like this because it's all part of the bonding rapport these guys have with each other."

If evidence is required that words spoken by the heir to the throne echo out further than those of an ordinary member of the public it is provided by the following letter by Mike Yalden, printed in the Australian newspaper. He said: "I wish the royals would stop using names like Paki and Sooty because it provides a bad example to their subjects. For many years I have been branded Chrome Dome, Four Eyes and worst of all Old Pommie Bastard, when all I really wanted was to be called Sir."

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