England, 1930s. Arthur, a young boy with cerebral palsy, is removed from his idyllic childhood and placed in an institution for disabled people patrolled by a sadistic warden, Dilke. Two friendships save him from complete despair: with an older boy, Frank, and with a fantasy being called Skallagrig.

The present. Esther has lived in Southfield Manor School, a home for disabled children, since her mother died two years ago. On her birthday, she receives a visitor: her father, John, now a failed businessman. She refuses to acknowledge him until persuaded by her close friend, Tom. Her father tries to win her over with a birthday party but it is not a success. John takes a job at Southfield Manor, driving the minibus. He takes Esther and her friends Raj and Tom to a fair and sports day for disabled people. Esther asks a fortune-teller about the Skallagrig stories. The fortune-teller directs her to a blind biker, who reveals what he knows about Arthur and Skallagrig.

The past. Years pass in the institution and Arthur grows to adulthood. The same grind of brutality and deprivation alleviated by his closeness to Frank and belief in the Skallagrig. One day, a pretty woman visits the institution. They become lovers. Eventually she becomes pregnant. Both are thrilled and Arthur makes plans to escape.

The present. Esther is staying with her father. Their relationship is still difficult. John shows Esther a home movie of her mother, the family in happy times. John explains that she was not invited to her mother's funeral because her grandmother, Margaret, rejected her disabled grandchild. Esther still wants to see her. John takes Esther and her friends on a road trip. They make a detour to Skipton, where Margaret lives in an elegant house. Margaret is uncomfortable about the presence of the disabled group. She and John exchange recriminations about their lack of support for Esther and her mother. Margaret suspects that John returned only because his business failed and now he is looking to give his life a purpose by looking after Esther. John and the gang leave the house. They stop at a barn dance. Esther wheels away to be on her own and meets a blind girl who takes up the story of the Skallagrigg

The past. Dilke discovers the pregnancy and Arthur's escape plans. As punishment, Dilke has another warden, Rendell, rape Arthur, hurting him very badly.

The present. John and the gang find the institution where Arthur was incarcerated, a psychiatric hospital. They are directed to a historian called Sam Hopkins, also disabled. He continues the story of Arthur and Dilke. There was a big scandal at the hospital as word filtered out about its routine abuses. Inspectors descend on the hospital. Papers are written and Dilke is outed in a documentary film as one of the main perpetrators of the abuses of residents. As the gang wander the grounds of the hospital they discover that some long-term patients have been living there for decades, as has the warden, Rendell. Rendell, clearly rattled by the intrusion, tells them that Dilke and Arthur went away. The gang break in, discover Frank and escape with him.

Following Frank's vague clues, the gang arrive at a seaside geriatric hospital. A tea dance is in progress; serving the tea is Dilke. The gang mingle with the residents, asking questions. Realising the gang's purpose, Dilke steals away to his rooms. John pursues him, but the young people are ahead of him.

In his room, Dilke beats a prone, bedridden figure: Arthur. Esther and Raj arrive. Dilke turns on them, throwing them out of their wheelchairs. Frank arrives and beats up Dilke. Then John arrives and breaks up the fight. Dilke breaks down. He says he looked after the disabled people but they gave him no respect. Now he still doesn't get any respect.

Esther wants to be carried to Arthur. She asks the identity of Skallagrig. Arthur tells him that Skallagrig was his brother. All his life he knew that his brother loved him.

Arthur is reunited with his beloved brother and with his dearest friend Frank. John tentatively proposes that Esther come and live with him.