In the song, Kirsty MacColl sings the lines, “You scumbag, you maggot/ You cheap lousy faggot/ Happy Christmas, your arse/ I pray God it’s our last,”
“The word was used by the character because it fitted with the way she would speak and with her character. She is not supposed to be a nice person, or even a wholesome person,” he said. “She is a woman of a certain generation at a certain time in history and she is down on her luck and desperate.”
“Her dialogue is as accurate as I could make it but she is not intended to offend! She is just supposed to be an authentic character and not all characters in songs and stories are angels or even decent and respectable, sometimes characters in songs and stories have to be evil or nasty in order to tell the story effectively,” the statement continued. “If people don’t understand that I was trying to accurately portray the character as authentically as possible then I am absolutely fine with them bleeping the word but I don’t want to get into an argument.”
Source: The Pogues’ Shane MacGowan Responds to Calls to Censor “Fairytale Of New York” | SPIN