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Riding the surge. Betting on a Conservative landslide

April 25th, 2017

If the polls are to be believed, the Conservatives are in for a spectacular night on 8 June.  ICM, YouGov and ComRes are all reporting national leads of more than 20% for the Conservatives – YouGov and ICM three times in the last week.  Labour seem in disarray, with the gaffes and questionable decisions coming in fast and thick.  Their morale is on the floor, with Labour MPs openly refusing to endorse Jeremy Corbyn for next Prime Minister.  There is a palpable sense of worse to come.

The betting markets have priced in a catastrophe for Labour, with William Hill offering 5/6 on Labour getting either more or less than 164.5 seats – other bookies’ prices are similar or even less generous.  This implies a baseline of Labour losing 67 seats, which would require an adverse swing of just less than 7% (a 20% Conservative lead would entail a swing of 7%).

Now I am a seller of Labour at this price, but it’s always worth stopping and pausing to consider the other side of the case.  First, “the trend is your friend” is a very dangerous motto.  What if this is as bad as it gets?  It might be.  Despite the large poll leads that the Conservatives have racked up, Labour have not dropped vote share in any opinion poll in the last few days (and if anything have risen a point or two).  Their support base might yet crumble but it hasn’t yet.  There are other opinion polls from Survation and new pollster Norstat that show smaller, though still very sizeable, Conservative leads, and there is no particular reason why Survation should be wrong and ComRes should be right.  And the Conservatives may falter or the public may decide that the size of the overall majority needs to be kept in check.  This is not a one way bet.

With all those cautionary notes, I am still a seller of Labour at 164.5.  Labour’s apparent lack of organisation does not inspire confidence that they will mount a sturdy rearguard defence, which itself suggests that Labour will underperform uniform national swing.  Martin Boon of ICM has hinted that Labour might well be flattered by polling adjustments, tweeting after the first 20+% lead for the Conservatives that “It could get worse for Labour. The were a wafer away from 24% AND our adjustment lifted them +2 and took -2 off the Tories.”

In the third of the ICM polls with a 20+% lead, a cross-tab showed the Conservatives leading by 17% in Labour-held seats with a majority of less than 15%.  This represents a swing of roughly 12 or 13% in these Labour-held seats, suggesting the Conservatives could take 100 seats or more.  While this cross-tab involved a fairly small sample, it showed exactly the same pattern that Chris Hanretty had uncovered in December of disproportionate swing in Labour-held marginal seats.

There are also tell-tale signs bubbling up.  Teresa Pearce announced at the beginning of the month that she would be resigning from the shadow Cabinet to focus on her constituency.  That constituency is Erith & Thamesmead, Labour’s 108th most marginal seat.  I trust MPs to know what they’re doing when it comes to such matters, so since she clearly believes that her seat is seriously in play (Conservatives 7/2 with Paddy Power and Betfair Sportsbook), so do I. 

So I do expect Labour to underperform even the bookies’ current modest expectations.  The obvious question is: by how much? 

Even the most exuberant Conservative bull is going to need to give this question careful consideration.  Will the Conservatives take Chorley?  How about Exeter?  Tynemouth?  Huddersfield?  Pontypridd?  Stockport?  By this point, the swings are becoming mammoth.  The truly adventurous can back the Conservatives in Wallasey at 16/1, counting on just the 19% swing from Labour to the Conservatives.  I’m not especially tempted by that, I have to say.  But there is a 16/1 bet on the Conservatives I do like the look of.

I suggest we consider the type of swing expected and then look at the odds in specific constituencies.  Betfair Sportsbook’s odds show wild variance, presumably reflecting the beliefs of bettors.  The Conservatives are ranked 1/4 to take Great Grimsby, 2/1 to take Bristol South and 5/6 to take Birmingham Erdington.  On a uniform swing of 6.7% from Labour to the Conservatives, Labour would hold all three.  On a uniform swing of 7.4%, Labour would lose all three.  Obviously the betting public regard these three seats as very different and it appears that they are using Leavability as a litmus test.

Are they right to do so?  A seat that voted 51:49 to Leave should not swing very differently from one that voted 51:49 to Remain.  My take is that attributes about seats where Leave dominated mean that their voters are differently affected by polling dynamics from voters in Remain-dominated seats.  The priorities of younger urban professional voters are likely to be radically different from older rural and post-industrial voters.  That seems to be reflected in the polling – for example, the latest ICM poll shows the Conservatives leading Labour 37:36 among Remainers and 62:16 among Leavers.  Incidentally, that degree of identification of Leavers with the Conservatives also suggests that those Lib Dems dreaming of retaking the south west are doomed to disappointment.

So yes, I do think Leavability is the right litmus test, if not for the reasons usually given.  I expect the Conservatives to take all three of the seats listed above – making the 2/1 on Bristol South, which was a lot less Remainy than you might expect, just 52:48, good value – and perhaps to take seats that on the face of it look very unlikely indeed.  (Meanwhile, some other constituencies that look much easier for the blue team may well stay Labour.)  Might Ed Miliband be in trouble in Doncaster North?  It sounds ridiculous given that the Conservatives start in third and need a 17% swing, but his constituency voted over 70% Leave and we have no reason to assume that Doncastrian Leavers are reacting all that differently from Leavers elsewhere.  The maths look worrying for the erstwhile Labour leader.  At 16/1 with Betfair Sportsbook and Paddy Power, the Conservatives must be worth a flutter.  I’m on.

Alastair Meeks