Combine the flour and baking powder in a large bowl. Make a well in the centre and add the butter. Rub the flour and butter together with your fingertips, working quickly.
In a small bowl, whisk together the sugar, egg, vanilla and salt. Make a well in the centre of the flour mixture and add the wet mixture. Stir together gently till a dough forms. Form a ball, wrap in cling film and place in the fridge to rest for 1 hour, or up to overnight.
Preheat the oven to 180 C / Gas 4.
Place a large sheet of parchment on your work surface. Take a portion of the dough, flatten with your hands, then place another sheet of parchment on top. Using cutters, cut out various shapes and remove the trimmings. Transfer the sheet of parchment to a baking tray and spread out the biscuits so that there's about 1 to 2cm space between them. Repeat with remaining dough.
Bake in the preheated oven for 10 minutes, or till biscuits are lightly golden. Remove and cool completely on a wire cooling rack.
For the icing, combine the icing sugar and water. Whisk till smooth, adding more sugar or water to achieve your desired consistency.
Divide the icing between two or three bowls. Stir in food colouring to each bowl as desired - just one to three drops per bowl should be sufficient.
Spread the icing on the cooled biscuits. You can choose to cover the entire biscuit in icing, or get creative by using the icing to draw onto the biscuit. Set aside for several hours to let the icing dry and set.