Stolen ration books are planted in Harvey's surgery and the police call after Tory councillor Baldock accuses Harvey of theft.

When Harvey threatens to expose Baldock's extra-marital affair he confesses that he has been leaned on by vengeful Blackshirts to incriminate Harvey. After Erich's bakery has had an unwelcome visit from a food inspector Harvey comes to his rescue and the Moons and the Gottliebs sit down to Christmas dinner. Harvey, however, has to make a mercy dash to a suicidal Baldock, whose wife has learned of the affair and left him though he is prepared to tell the truth and exonerate Harvey.

Maggie also gets dumped by Tom though Rita and Leo cut a dash at the ballroom dancing finals.

1948 starts badly for Harvey when the local Labour Party, unsympathetic to his recent troubles, accuse him of bringing them bad publicity.

Feeling that Dick has not supported him Harvey offers his recognition from the firm though he reconsiders when Leo, set up by jealous ex-boyfriend Joshua, is charged with importuning and Dick asks him to prepare a defence case. In court Rita gets Leo acquitted by claiming that they are lovers and, in so doing, provides Harvey with grounds for divorce on account of her supposed adultery.

Already unhappy that her false admission in court might lose her custody of Stanley Rita gets more depressed as she loses handsome divorced Howard to Leo and has to accommodate Veronica, after she announces that she is pregnant and her father has thrown her out. To ease congestion Rita lets Stanley go to live with his father but finds Veronica a trying lodger.

Fortunately, Leo agrees to take her on as his housekeeper. Harvey is also feeling distanced from Frieda when she goes to Paris alone to promote her artwork and, after a night in the pub, ends up in bed with Rita.

As news spreads of Harvey's night with Rita, Nan is disapproving, Frieda feels betrayed and Harvey himself feels used since it nullifies all charges of adultery against his wife.

Maggie gets asked out by local stall-holder Alfie, who is also a talented boxer and there is a family outing to watch him win his fight.

Unexpected drama follows as Veronica goes into early labour and Ian from work declares that he is the father of her baby.

Erich dies suddenly and Frieda is amazed to get a visit from Joan Gottlieb, a Gentile who married Erich in Manchester before Frieda came to England, and has evidence that she lent him the money for his first bakery. As she is still his legal wife she is claiming her rights, including the house, but Harvey, using his professional contacts, learns from a Manchester lawyer that Erich separated from her and so she is entitled to nothing.

Rita's supplier, Alistair, offers her a partnership making face cream but she refuses when she finds that she is expected to do all the work. Leo hopes to get a shop in the West End with Rita but it falls through.

Having inherited Erich's house and money Frieda is now a wealthy woman and Harvey feels financially inferior, considering taking on the bakery but Frieda decides to sell it.

Nan marries Geoff and moves in with him and Veronica accepts Ian's marriage proposal, asking Rita to return the money she lent her for the salon. This means that Rita is now unable to put down the deposit on the house she wanted.

Alfie continues to do well in the ring, to Maggie's disapproval.

As Maggie proudly shows off the engagement ring Alfie bought her, Harvey travels to Margate with a professional co-respondent to facilitate his divorce. Nan, on the other hand, wonders if she has made a mistake in marrying Geoff and returns to Harvey's though, after a chat with Frieda, she and Geoff are reconciled.

Rita gazumps Veronica when they both make an offer for the same house but, as Rita and Stanley move out of the prefab, Veronica and Ian move in.