The story takes place in late December 1988 with the first episode starting on 23 December. Lol is haunted by visions of her dead father Mick – whom she killed in the previous series when he tried to rape her – and is struggling to cope with living alone with her young daughter, Lisa, who is a result of her affair with Milky two and a half years prior. Lol’s affair has also led to Woody imposing exile upon himself from the gang, but he has begun to rebuild his life. He has a new girlfriend, Jennifer, who his parents adore, and has been offered a promotion at work. Smell and Shaun are still together, but growing distant. Shaun exercises his creative side on a drama course at college, and grows close to Fay, a girl performing in his Christmas play. Milky is welcomed back into the gang after spending some time away, but after Woody sees them together in the pub, old wounds return to the surface.