Act 3 opens as a deliberate replay of Act 1, but this time with Helena at the ironing-board wearing Jimmy's Act 1 red shirt. Months have passed. Jimmy is notably more pleasant to Helena than he was to Alison in Act 1. She actually laughs at his jokes, and the three of them get into a music hall comedy routine that obviously isn't improvised. Cliff announces that he's decided to strike out on his own. As Jimmy leaves the room to get ready for a final night out for the three of them, he opens the door to find Alison, looking like death. Instead of caring for her he snaps over his shoulder "Friend of yours to see you" and abruptly leaves.
After a scene break, Alison explains to Helena that she lost the baby — one of Jimmy's cruellest speeches in Act 1 expressed the wish that Alison would conceive a child and lose it — the two women reconcile but Helena realises that what she's done is immoral and she in turn decides to leave. She summons Jimmy to hear her decision and he lets her go with a sarcastic farewell.
The play ends with a major surprise — a highly sentimental reconciliation between Jimmy and Alison. They revive an old game they used to play, pretending to be bears and squirrels, and we are left to assume that they live, if not happily, at least in a state of truce in the class warfare, ever after.