After a visit from Monty's pregnant girlfriend, Rita dumps him and goes out with the charming, urbane Leo Brandon, who has employed Maggie in his hat shop, only to be told that he is gay!

Maggie is also dated by the well-spoken, well-educated Tom. Harvey starts work with Dick and his father in their law firm, falling foul of officious chief clerk Ryder but persuading the firm to act for the Gottliebs in their efforts to free a young Jewish friend arrested by the British for trying to enter Palestine.

Christmas is coming, and Harvey clears the air with Ryder whilst Rita takes over the running of the salon and Maggie gets back with Tom, to the dismay of her annoying friend Veronica.

The Gottliebs' teen-aged compatriot Yossela moves into the house but he is deeply disturbed by his wartime experiences and behaves erratically, slashing a portrait Frieda is painting of Harvey as he is jealous of their growing relationship. Ultimately, with Tom's help, he is put onto a ship bound for Palestine and, with peace restored, Nan kisses Erich under the mistletoe.

It's the coldest winter for fifty years and, whilst Harvey gets cosy with Frieda, Rita is feeling the bite. Firstly, after Stanley's headmaster has visited and had to stay the night on the sofa after being snowed in, she has to contend with his irate wife.Then the water mains freeze up, closing her salon when she is in debt to the landlord.

Leo writes another cheque, but his possessive mother cancels it. Fortunately, Veronica is so keen to work with Rita that she is prepared to lend her her life savings.