A secondary school in Manchester, the mid-1970s. The attendees of a comedy evening class begin to assemble. First in is Gethin Price, followed by Irish docker George McBrain, who has given a lift to his classmate Phil Murray. Price does not join in their banter. Phil worries that Ged, the other part of his double act, has not yet turned up. Two more classmates arrive: Jewish businessman Sammy Samuels and Mick Connor, another Irishman. The classmates indulge in some banter, which is interrupted by the arrival of their teacher, the comedian Eddie Waters. As they prepare the classroom, Waters is troubled by the reappearance of Price with a skinhead haircut, and he is clearly concerned when Price informs him that he has changed his act.

Waters outlines the itinerary for the evening. The class will warm up, then leave for the Grey Mare Lane club, where they will each perform a five-minute act. Bert Challenor will be the representative from the Comedy Federation, which will awarding contracts to the more promising comics. Waters has a history with Challenor, and the others worry that this will affect their chances. They start the warm-up, but are interrupted by the late arrival of Ged, Phil's brother and comedy partner. The first verbal exercise ends with Price improvising a crude limerick. Waters wants to lead them away from the use of stereotypes in their acts, and he analyses Price's limerick to demonstrate its hatred of women and sex. Waters concludes that most comedians feed prejudice and fear but the best ones illuminate those emotions.

They are interrupted by an Asian man, Mr Patel, who is looking for an English language class. Waters takes him to see the principal. The classmates can't understand why Price, the teacher's pet, is so bent on riling Waters. Together, they sort out a running order for their acts, with Price last on the bill. Waters returns, and they try another exercise, which involves thinking about a difficult incident in their lives. After some awkward stories, Waters ponders why humans laugh at the pain of others, but cry at their own.

Challenor enters the classroom, and Waters leaves with Patel to try the principal again. Challenor makes it clear that he expects a very different type of comedy from that which Waters has been instilling in the group. When he leaves, the men panic and try and think of ways they can make their acts more appealing. Waters returns and leads the men off to the club.

In the club, the men perform their turns. Connor sticks with his act, but after a slow start Samuels abandons his act for more obvious fare. Phil ruins his double-act with Ged by lapsing into crude racist material, and McBrain alters his material skilfully to please Challenor. Finally, to complete silence, Price emerges in white-face and acts out a verbally and physically violent scene as a football supporter confronting two blow-up dolls in evening dress. The concert secretary winds up the evening.

The men return to the classroom. They are tense, either because they are aware of their betrayal of Waters, or because they are unlikely to do well out of the evening. Challenor enters with Waters. He dismisses Connor, Phil and Ged, but with some reservations praises Samuels and McBrain. He generally finds the acts appealing only when they abandon Waters' lessons. Challenor ends with some very harsh criticism for Price. As he leaves he is ticked off by Waters, and the other men, except Price, trail out saying their goodbyes.

Price discusses his act with Waters. Waters thinks it was brilliant but full of hate, and not containing the compassion that they had worked on over the previous weeks. Price counters that the compassion belonged to Waters not him, and he felt a release with the hate in his act. Waters recounts his days with ENSA immediately after the war, when a visit to a concentration camp brought home to him that humanity has got to get beyond hate. They reach an impasse, and Price leaves. Patel suddenly enters to retrieve a bag he left behind earlier. He tells Waters a joke, and Waters encourages him to join his next class.