Archive for the 'Guest slot' Category

h1

How Labour need to stop worrying and learn to love the bomb

Monday, April 9th, 2018

Picture credit: The MOD twitter feed

Despite its relative lack of salience as a motivating issue for voters there is an interesting discussion to be had on how a Corbynite Labour party can use defence policy to attack the Conservatives in an area of perceived strength.

The last few decades of British defence policy have been characterised by constant out-of-area and expeditionary deployments that have been hindered by massive personnel reductions and scandalously poor procurement and program management. At some point the delusion will no longer hold and UK defence policy will have to reflect reality rather than aspiration. Which of the two major parties will be able to supply sufficient vision to implement the necessary changes?

DISHONEST OR STUPID: THE CHOICE IS YOURS

An examination of the defence policies manifestos that the two major parties prepared for the 2017 General Election reveals two similarly brief offerings. One is deceptive to the point of dishonesty and the other is merely lackwittedly ignorant.

The Conservative offering is platform focused, a vulnerability to which we’ll return, as it is largely a list of hardware that the government has bought, is buying and will continue to buy with taxpayers’ money. It also displays a certain amount of creative ambiguity when it comes to future intentions. For example, the Astute submarine program will be ‘completed’ but there is no commitment to the full seven boats so completion can be artfully redefined as six boats should necessity dictate. This type of misleading language reveals less about the actuality of Conservative defence policy than it does about their cynical assessment of the average voter’s analytical capacity.

Now picture the scene inside Labour party HQ in April 2017. May has just called the Election That Never Wasn’t and a policy platform must be hastily assembled. Some junior wonk with Ronnie Corbett glasses and a W.G. Grace beard has been charged with writing the defence policy. He is still shaking from last night’s cocktails and he thinks he might have tweeted something about Jews while he was drunk. He has fifteen minutes to draft a defence policy or Seumas will know why. The result is a puerile blend of platitudes about the UN and peacekeeping combined with some hastily assembled facts from Wikipedia with which to bludgeon the Conservatives.

Despite the utter and manifold failures of Conservative defence policy from 2010 onwards the Labour manifesto chooses to highlight the withdrawal from service of the Harrier and Ark Royal. These decisions were taken seven years ago in the 2010 SDSR and there is no examination of why these decisions were poor or any offer of a competing vision. Like the Conservatives the statement is platform focused as if that were the most important consideration of defence policy.

CONSTRAINED BY THE CORE

The Conservatives have a defence policy problem. Their core vote expects to have their dessicated pleasure centres of nationalism and martial reverence stimulated by the long pale finger of Williamson. This means areas of defence that actually have a negative effect on the nation’s military capabilities, Red Arrows – I am looking at you, are untouchable lest the bowls clubs, WIs and golf courses of Middle England combust with Daily Mail directed incendiary rage.

Since the end of World War 2 every Conservative government, with the notable exception of Sir Edward Richard George Heath KG, MBE, has left office with lower defence spending as a proportion of GDP than it inherited. So while the Conservatives have a marvellous track record of slashing defence spending they are politically, culturally and organisationally incapable of making the types of radical and imaginative changes the country needs.

THE STRATAGEM OF THE CENTRAL POSITION

The contemporary Labour party periodically moves between three positions on defence policy. These are: disinterest, embarrassment and internecine conflict over nuclear weapons. Despite the longstanding ambivalence of the Absolute Boy toward the Absolute Bomb I believe that Labour will enter the next General Election campaign with a policy of replacing Trident. There a few good reasons for this but principal among these is pragmatism; the program will simply be too far advanced to cancel by 2022.

In the past week alone the government issued a $126m contract for long lead items relating to the Dreadnought boat missile compartment to General Dynamics in Rhode Island. By the time of the next election a great deal more money will have been irrevocably spent eliminating cancellation as a realistic option.

Labour could seize the initiative on defence policy by pivoting away from the usual technocratic arguments about hardware and, instead, adopt a strategy that focuses on the armed forces’ most precious and most mismanaged asset: the people.

For decades defence procurement policy has been subordinated to a strategy of centrally managed industrial welfare. My expectation that Labour would be able to break this cycle of dependency on work creation schemes is nugatory. However, a Labour defence policy that put people at the centre could be relevant and compelling.

DO LESS WITH MORE

Here are some worthy ideas worthy of consideration in the Corbyn government’s first defence white paper.

The most important and central plank of the new policy should be to face reality and reverse the now decades old doctrine of doing more with less. The focus of the UK forces should be overwhelmingly on the North Atlantic, the GIUK gap and the British Isles. Call it the East of Skegness Policy. British forces have been in more or less constant combat in the Middle East for 26 years. It is now safe to conclude that whatever it is that we are doing there isn’t improving the situation and that we should stop. This strategic pivot would end long out of area deployments and thus greatly improve morale and retention.

The armed forces are a large and complex organisation that increasingly requires many technical specialists. They are constrained into to recruiting into exactly two positions: apprentices and management trainees. Every other vacancy must be filled by internal recruitment. Recruitment and retention should be aided by improving pay, housing and other similar issues. The retention problem is particularly grave once officers hit the OF-3 or OF-4 level in their late 30s or early 40s. The forces lose a lot of potential senior talent at this level so consideration should be giving to allowing people to move in and out of reserve status with relative ease to get some of them back.

All three services should be much better integrated with the creation of ‘purple’ uniform posts such as medics or other specialists who can move between combat arms during the course of their career. A United Kingdom Defence Force with a single administrative spine should be the ultimate goal.

The final strand of the defence policy should be the treatment of veterans. This doesn’t mean poppies or charities or similar facile nostrums. It should consist of a thorough and structured program to prepare, emotionally and professionally, every servicewoman and man for life after the forces.

As the young people who end up killed, maimed or mentally damaged are overwhelming working class from the more deprived areas of the United Kingdom this is the sort of class issue that Corbyn could sell with energy and authenticity.

Dura Ace

Dura Ace is a PB regular and served as a Fleet Air Arm officer for 20 years



h1

The day of the husky?

Sunday, February 18th, 2018

Picture credit : WWF

One of David Cameron’s early and later much-derided moves was to go to the Arctic to be seen hugging a husky: I hope it won’t be seen as partisan to say that few of us felt that Cameron had a deep-seated love of huskies: we were all clear that it was symbolic. He was detoxifying the Tories – not just about harsh efficiency, but caring about the environment too.

Ultimately, though, the environment was seen as a second-order issue. Sure, if you asked people if they cared about climate change and pollution, they’d express an opinion, but they generally wouldn’t switch their votes over it. What mattered was the economy, the NHS, immigration and a general impression of competence – and we can now add Brexit.

So why are the parties suddenly working so hard on environment and animal welfare issues? Michael Gove has frankly astonished most people on the green side of politics with a series of speeches and commitments which go beyond lip-service and show a genuine understanding of the way that apparently disparate issues like climate change, pollution and factory farming interact. I know lifelong environmentalists who were blown away by this speech.

Meanwhile, the Labour animal welfare manifesto last week was Christmas come early for the animal movement, and had a media reach (defined as everyone reading/viewing media that reported it, obviously with duplication) of a mind-boggling 230 million. (Disclosure of interest: in my cross-partisan job I’ve had a lot of direct contact with both parties over these initiatives.)

There’s a reason, and it’s not only a sudden rush of green idealism. The parties have fought each other to a standstill on the big issues. The economy? The deficit has gone from urgent crisis to “Is that still a thing?” in public consciousness. Brexit? Clearly difficult and not really under British control. The NHS? In crisis for so long that many people have lost confidence that it will be fixed. Immigration? The Tories aren’t doing much, Labour doesn’t want to do much, UKIP has imploded. Competence? Much of the public doesn’t rate anyone on that score. So the parties are locked at about 40% each with no sign of movement.

Consequently, they’re starting to look at traditionally second-order issues as a way of shifting the dial. Housing, the environment, animals, student fee reforms: perhaps undecided voters will feel that there’s not much to choose on the big issues, so let’s go for the party that seems to have some new ideas on other things.

Like Cameron’s huskies, these ideas aren’t just about the subject, though unlike the husky stunt they have some genuine content. They’re also about shifting the image of parties to be seen as movements that take an interest in a wide range of subjects. And, not least, they’re a way for Ministers and Shadow Ministers in traditionally less-reported areas to gain real attention with innovative thinking.

That’s not a bad thing in our fast-changing world. Expect more of it.

Nick Palmer

(Nick Palmer was Labour MP for Broxtowe 1997-2010. He now works on animal welfare issues on a cross-party basis.)



h1

Climate change denial is dead – but the fight for green votes is starting

Friday, January 5th, 2018

Donald Trump and the politics of climate change

Donald Trump’s tweet that the snow-blasted US east coast would benefit from some global warming has reignited attention to his climate-change denial. But after a year of his presidency, it’s increasingly clear that, in terms of both public opinion and policy, rejection of climate science is a sideshow.

Having a climate-change denier in the White House might seem like a triumph for people who want to stop action against global warming. Trump’s plan to pull the US out of the Paris climate agreement certainly gives the impression he’s winning that fight.

But in reality, Trump has only shown that climate denial is defunct. When he tried to topple the climate deal, the rest of the world pushed back. No other country has joined his planned defection – instead several have accelerated their timetables for cutting greenhouse gas emissions. And investors are giving up on climate denial. Major fund managers like BlackRock are now demanding to know how emission cuts will affect their investments and are selling businesses that depend on fossil fuels.

And climate denial is a far weaker electoral force than it seems. Only about 10% of Americans firmly oppose climate action, with another 11% doubtful about it. While Trump won among both groups, most of his voters can’t be described as climate deniers. And in the rest of the world, vanishingly few people think climate change is a hoax. Recent data found that at least 97% agree climate change is happening, in 19 of the 22 countries polled for the European Social Survey.

If anything, the evidence points to climate change being an untapped electoral opportunity for environmentally-conscious politicians. In most European counties at least 20% are very or extremely worried about climate change.

In the UK, where 1 in 4 are very or extremely worried about climate change, it’s effectively been off the electoral battleground since Cameron’s husky-hugging Arctic trip. To most voters, it seemed there was a consensus among the major parties about the issue. But that could now change.

The Tories are hunting for ways to stop, and reverse, the loss of younger voters, put off them by values-driven concerns like foxes, Brexit and citizens of nowhere. Burnishing their approach to climate change might help the Tories: a UK YouGov poll for think tank Bright Blue found it’s the second-top subject that under40s wants politicians to talk about more, ahead of education, housing and immigration.

Meanwhile, other parties may see an opportunity in hitting the government harder on climate change. The Lib Dems, in particular, might wonder if they can appeal to the voters looking for a party with a more robust message on climate change.

Most voters, though, are in the middle on climate change. Around half the public have little doubt it’s real and a threat, and want it dealt with, but don’t think about it much. Satisfying them, while meeting increasingly tough climate targets over the next couple of decades, will be a growing challenge.

Trump’s climate denial will get attention as long as he’s in power, but we shouldn’t let that fool us into thinking he’s doing any more than appealing to a section of his base. The rest of the world has moved on, and the risks are far greater to parties that drag their feet than those that set the pace.

Leo Barasi

Leo Barasi is a regular with Keiran Pedley on the PB/Polling Matters podcast. His book,  The Climate Majority: Apathy and Action in an Age of Nationalism (New Internationalist), is now available



h1

Three Tribes Go To War – the historical divides within the Tory Party

Monday, December 18th, 2017

Charles on the various tribes of the Tory Party

“I support this measure as a measure of reform; but I support it still more as a measure of conservation … the voice of great events is proclaiming to us, “Reform, that you may preserve”

Three years before the Tamworth Manifesto, Macaulay’s speech on the Reform Bill prefigures the Conservative party’s core philosophy. Peel’s pledge to ensure “the correction of proved abuses and the redress of real grievances” while resisting unnecessary change for fear of “a perpetual vortex of agitation” is one that all Conservative leaders have cleaved to ever since.

It is this, rather than any mystical belief in the monarchy or union that defines the Tories: as Lord Liverpool wrote of his government: “it is almost unnecessary to observe that the British Government … could only be a Whig Government … for [it means] nothing else than a Government established by laws equally binding upon the King and the subject”.

Similarly the Union is a product of history, not some eternal verity: it brings immense value and should not be abandoned lightly, but if the people of either Scotland or England decide to do so then so be it.  The same goes for Northern Ireland: prominent Liberal Unionists, such as Edward Carson, were opposed to special treatment for the six counties in the first place.

Instead of some driving political philosophy – as Hailsham put it “the only policy of a Conservative Government is to pause for thought” – the Conservative Party comprises a patchwork of traditions that can be grouped into three strains: Ultras, Paternalists and Radicals.

Ultras oppose change but are left behind as the bulk of the party comes to term with the realities of modern life.  They may enjoy temporary prominence (who remembers Richard Vyvyan?) but can do no more than glower from the backbenches before fading into irrelevance. My prediction: Jacob Rees-Mogg will never lead the Conservative Party.

Radicals, who look to Gladstone not Disraeli, are the most philosophically coherent of the Tory Tribes. The state should have a limited role at home (both economically and in personal matters) but abroad they seek a global role for Britain and free trade. Intellectually they are aligned with the Orange Bookers, but find the mushiness of the modern LibDems unappealing.

However, their excessive fervour and preference for theory over practice limits their appeal: they provide intellectual energy but few leaders. They claim Thatcher as one of their own, but her choice to mark her election with St. Francis’ Prayer (“where there is discord may we bring harmony …where there is despair, may we bring hope”) was pure One Nation Conservatism. My prediction: David Davis will never lead the Conservative Party.

The remaining group – the vast majority of the party in the country and Parliament – are the One-Nation Conservatives. At its heart this is the belief that societies develop organically and members have obligations to each other.  Paternalism (the Big Society) is one form, but it also underpins everything from the welfare state to the desire that immigration should be moderate and selective. They are sometimes accused of a lack of principle, but One-Nation Tories see compromise in pursuit of social stability as a positive virtue not something to be condemned.

The challenge of Brexit for the Conservatives has been that it split this group down the middle: the Hedgers feared the risk of leaving, while the Whigs saw the requirements of membership as incompatible with their duties to the people as a whole.  Post Brexit, however, the fundamental desire to accommodate to the reality of life will reassert itself and the party will unite once again.  It is this group that will provide the next leader: my personal view is that if the decision is in 2020 it will be Hunt; if it is after 2022 it will skip to the next generation.

Charles

Charles is a longstanding contributor to PB



h1

Symbols for our time

Tuesday, November 28th, 2017

In an age of hashtags, social media campaigns, lit candles and all the rest of it, it is easy to sneer. Such narcissism. Gesture politics is castigated as the last word in pointless posturing, mainly designed to make the politician – rather than the persons at whom it is aimed – feel good. “Action this day. Not words or images” – as Churchill did not say.

But symbols and gestures do matter. Done right – an image, a simple action, wordless – they can sum up a cause, express anger, help heal a wound or set an example. They often bring a touch of the sacred to pedestrian concerns. They can inspire action. They can make us pause and reflect and remember. They often transcend boundaries. Symbolic gestures – and the rituals which often accompany them – form part of the rhythm of our story, whether personal or collective. So here is my list of some of the most important – and beneficial – symbolic gestures of recent times – and two which should have happened – and why they matter.

1. The Queen bowing after laying a wreath at the Garden of Remembrance in Dublin in 2011 and then opening her speech in Dublin Castle with Gaelic. A minute’s silence and a few words helped bring a full stop to a long, troubled relationship in a way which had been unimaginable for so long. And it was precisely because of who did it that it mattered. There are many others which could have been chosen: Martin McGuinness and HMQ shaking hands and smiling, Cameron apologising unreservedly for Bloody Sunday. But royalty’s enduring appeal and power is fundamentally based on the way it can both express and transcend the work done by here today/gone tomorrow politicians. For those who care about Anglo-Irish relations, it was a genuinely moving moment.

2. Mandela attending the rugby World Cup final in 1995 and shaking hands with the Afrikaner captain. Nothing better exemplified what Mandela said about wanting to unite the country. Nor his emotional intelligence in reaching out to something that mattered to South African whites – sport – and which had long been used by apartheid’s opponents to exemplify that community’s isolation.

3. Pope John Paul II praying at the Wailing Wall in 2000. The Catholic Church had earlier formally apologised for its attitude to Jews. But the sight of the frail Pontiff praying – and seeking forgiveness – at one of Judaism’s holiest shrines made explicit and human what had been previously set out in archaic and ornate language few ordinary people would read.

4. Playing the American national anthem at the Changing of the Guard after 9/11. A small thing but to Americans in London at the time it felt like someone reaching out to hug them. Look at Bill Clinton’s response to a British journalist at the time to see what it meant.

5. Vietnam veterans protesting in Washington by throwing their medals over the barriers designed to keep them out. When those who had fought and won medals threw away what had been so hard won, so hard fought for, it brought home like nothing else how toxic that war was to the US’s very best idea of itself.

6. The decision by Emmett Till’s mother in 1955 to have an open casket showed America the reality of racism: the beaten and bloodied body of a 14-year-old, unrecognisable as the child he was. There was a faint echo of the “Am I not a man and brother?” coins of the anti-slavery campaign two centuries earlier. This – a man in chains, a child pulped – is what your ideology means.

7. Mitterand and Kohl holding hands at Verdun in 1984. Nothing better symbolised the hopes of a Continent for no more war.

8. Willy Brandt falling to his knees at the gates of Auschwitz in 1970. He expressed the shame and sorrow of a nation both as his nation’s representative and as a German who could justifiably claim to have been a good German during the war.

9. Mrs Thatcher turning up, impeccably dressed, not a hair out of place, walking to the podium at the Tory Party Conference in 1984, barely hours since the assassination attempt on her and while others were still being rescued. Before even saying a word, her mere presence – defiant, angry, determined – symbolised democracy’s resistance of those who would use violence to impose their will.

10. “Liberté Egalité Fraternité” emblazoned at Wembley Stadium 3 days after the Bataclan terror attacks in 2015. Sport again. Using the emblem of the attacked nation. And a reminder that the French are, au fond, family. The image of the statue of Marianne draped in the French tricolore at the end of the march after the Charlie Hebdo attacks in January 2015 could also have been used. But that was a nation speaking to itself. This was one nation reaching out to another.

And the two which should have happened.

• After the furore caused by the Danish cartoons, they should have been published in full by every outlet in the free world. Free speech needed its “I am Spartacus” action. Saying that you believe in freedom of thought and speech is no good if you fear exercising it. Understandable why no one newspaper did so. But this was a time when solidarity and collective action really was needed. Instead we got demos and apologies in 2005 and murders and outrage in 2015.
• Aung San Suu Kyi’s recent speech about what has been done to the Rohingya was a missed opportunity to speak out with moral clarity about the evil done to the innocent. It was a speech by a politician. Not the speech of a leader who knew what it was to suffer human rights abuses.

Plenty I’ve left out. Over to you.

CycleFree



h1

Compounding the problem

Monday, September 18th, 2017

Picture credit : Wikimedia commons

It is said to have been Albert Einstein who called compound interest “the eighth wonder of the world”, and at this time of the year when some 400,000 fresh faced students are about to set off to university for the first time, they and their parents would be well advised to study what he meant.

Thanks to the application of compound interest to their student loans, this year’s new students will be faced with truly awesome debts, of a size which few of them have troubled to contemplate.

With maximum fees of £9250 per annum being applied by many universities, and a living allowance of £4193, on graduating after three years, including interest will already owe £45452. Those on four year courses (such an engineering and modern languages), and those studying in London will owe more.

If they are then lucky enough to get a job earning £31,000 per annum (more than the typical starting salary) repayments of £900 will be made in the first year, but interest of £2772 will have been charged and their debt will have grown by a further £1872. A real high flier with a salary of £41,000 will repay £1800 per annum (or £54,000 over the next thirty years) without having made any dent in their debt.

In fact you will have to be earning £51,800 per annum just to be covering the interest each year and stopping the debt getting even larger, and at that income, your total repayments (in other words what you will have paid to go to university) will be £83,160.

At the other end of the scale, those whose income never exceeds the repayment threshold of £21,000 per annum will accumulate debts of £279,455 over the thirty year course of the loan, and quite who will then be responsible for this debt is unclear, although one way or another it will eventually fall on the taxpayer.

Of course those who after graduating engage in further study, perhaps a masters degree and then a PhD may emerge from education with much larger debts, typically around £100,000. Suppose someone then pursues a career in academic science, where starting salaries for junior researchers are often quite low, even for those with higher degrees; if their salary remained under the £21,000 repayment threshold for ten years, they would owe £279,000. If they then obtained a really high flying job, the repayments might be large, but so would the interest accumulating each year.

Take an imaginary example of someone in that situation being appointed Vice Chancellor of Reading University on a salary of £261,000 per annum. They would repay £21,000 per annum, but the interest charges would be £17,000, so that their debt would diminish by a mere £4,000. It would be touch and go as to whether even at that salary they would ever repay their full debt, even though they would have repaid some £420,000 .

All of this assumes, that inflation (to which the interest rates are linked) remains at 3.1%. Some of us are old enough to remember interest rates of 10%, but thanks to the impact of compound interest, even a modest rise in inflation will make all of the above figures even more frightening.

In the meantime, I can only suggest to prospective students and their parents that they start refreshing their memory as to how Einstein’s eighth wonder of world is calculated.

Dr Barry Monk

The author is a consultant dermatologist who went to university at a time when all fees and living costs were paid for you.



h1

Lucian Fletcher on the latest Northern Ireland assembly poll

Thursday, February 2nd, 2017

Arlene Foster’s personal ratings fall through the floor, but the DUP will bank on fear of a Sinn Fein First Minister to keep their position as lead party in Northern Ireland Assembly

The first LucidTalk opinion poll ahead of the 2017 Northern Ireland Assembly election has been published and one of the most obvious headlines is just how few people are planning on switching their first preference votes, despite the calamitous collapse of the Stormont Executive.

The DUP is down to 26%, just three points lower than they received in 2016. Sinn Fein is at 25%, up one.

This poll will be immediately pounced upon by the DUP and will adorn leaflets all over Northern Ireland as they seek to hammer home their message: “Vote DUP or the Shinners get First Minister”.

In fact, leaving aside the joint nature of the OFMDFM, the current boundaries make it highly unlikely that Sinn Fein will get more seats than the DUP unless they are well ahead in vote share.

The main Opposition parties UUP, SDLP and Alliance are all seeing a small uptick in their poll positions but not to anything like the extent that they would have hoped for, given the reasons for this election.

The leadership approval ratings are interesting. Arlene Foster, former First Minister, is at 22%. The most popular leader is Alliance chief Naomi Long, at 52%. All other party leaders enjoy ratings in the 40s. That the DUP remain as the lead party suggests that the St Andrews amendment over the nomination of First Minister is acting as a firewall for DUP support.

Respected unionist political commentator Alex Kane has also suggested that this race for the First Minister being so ‘close’ on this poll could shift some voters to both the DUP and Sinn Fein. There are more polls to come before the election, which could give some indication as to how far this descends to the usual orange/green headcount.

There is more analysis to be done in terms of transfers. Indications are being hinted at by LucidTalk that there is evidence that some people are more willing to vote tactically against the Executive, rather than along community lines. If the Greens and Alliance rack up decent totals in their weaker areas, so all their transfers are at full value, this could help UUP and SDLP. That final seat in most constituencies might end up being swung for one of the smaller parties. But without a move away from the DUP to UUP to a much greater extent than this poll suggests, the damage done to the DUP will be little more than a flesh wound.

I would suggest that the UUP and SDLP will be quietly devastated by this poll. The mud is being flung at the Executive, the DUP in particular, and is sticking, but most voters are so tribal that they just don’t care. The over-riding feeling is to beat the other side. Corruption is not seen as being quite so bad, as long it’s on ‘our side’.

One staunch unionist told me last week that the money thrown at ‘community halls’ by the DUP’s Paul Givan was well-deserved because ‘the Shinners gave loads to the GAA before’. This mindset is really difficult to grasp from Great Britain. We find it shocking. But this cynical self-interest or ‘cute hoorism’ is something that people in Ireland (both in NI and the Republic) really understand.

So what are my thoughts on the politics from this poll?

I think the DUP would end up somewhere around the 30 (key Petition of Concern number) mark, SF a few back, UUP and SDLP both losing seats with the SDLP worst off. Alliance will probably hold on to their 8 and others will lap up a few.

As I say, it might all look a little better for the SDLP and UUP once transfers are taken into account, but I wouldn’t be holding my breath.Both the UUP and SDLP have internal discontent issues. An election in these circumstances which produces nothing tangible for them could be disastrous.

Lucian Fletcher

Lucian Fletcher is a long standing contributor to PB who lives in Northern Ireland.



h1

The EU referendum: An attempt to analyse the in-play betting

Monday, June 27th, 2016

PoliticalOdds

Michael Dent the creator of PoliticsOdds.bet, a site which tracks and graphs betting prices on political events, looks at the EU Referendum in-play betting

At 11:36pm on June 23rd, just before the first result was declared, the market was just short of 90% confident of a Remain vote. So much for markets knowing best – the market was wrong, and staggeringly confident in its wrongness.

So how did we get from there to settling the market for Leave? What follows is an attempt to analyse five hours of in-play betting. Of course, it is highly speculative, and it’s easy to create a narrative with perfect hindsight, so comments are welcome!

Inertia

When early results indicate a possible surprise event, the market is stubbornly slow to adjust. We saw it in the general election last year, when even after the shock exit poll it was possible to get excellent odds on a Conservative majority. And we saw it again here.

As results rolled in, suggesting that at the very least it was much closer than previously assumed, you could almost hear the excuses – that these must be freak results, that they did not represent a trend. But a trend of Leave over-performance against the parity model was indeed emerging, particularly by Swindon’s declaration. As a result, there was value to be had on the Leave price.

I think a bold gambler starting the night with a neutral position would have built a position on Leave here. Bets placed during this phase could have yielded a 200-500% profit.

Animal spirits

At 1:56am, a period of almost an hour of relative stability in the betting market turned to severe volatility for the next 90 minutes. The market moved fast and sharply. Within 45 minutes we had an astonishing three distinct crossover events.

During this period, I believe individual results moved the market far more than they should have done, magnified by animal spirits and confusion as gamblers were hypersensitive to any result that appeared likely to change the narrative.

Our smart gambler would have compared each result to her parity model at this point, and realising that the individual results did not signpost a significant change, would have stuck to her hypothesis, aiming to top up her position at the best prices. A more risk-averse gambler might well sit this period of volatility out and just watch the data, and no-one would blame him!

Acceptance

From 3:20am, the market began to accept a Leave outcome.

Our smart gambler had made her money by now and would have eased up on the betting. A risk-loving gambler (or one desperate to cover a loss) can still make some money here – even when the outcome looked pretty clear, profits of up to 30% were still available.

But the risk-reward pay-off was weakening fast at this point, and by the time available profits fell below 10%, any sensible gambler should have been of Leave, and perhaps building a small hedge position on Remain at >10 odds, to protect against a last minute black swan event (when the graph looks like this, anything might happen!)

A word on volumes

I was astonished by the in-play volumes. As PB reported, by 6am on polling day the EU referendum had become the first market on Betfair to surpass £50m in cumulative bets. But by the time the broadcasters called the result for Leave, the total matched on Betfair had more than doubled £113m.

So despite a four month campaign, 55% of all betting was matched in the final 24 hours. On three occasions during the in-play period covered here over £800,000 was matched in a two minute period. Most two minute periods saw at least £200,000 matched. Truly the biggest political betting event ever.

Lessons

In the chaos of in-play betting on an event like this, a calm head allows a smart gambler to make money. Or to keep their shirt – for me personally, I started the night with a significant position on Remain at 1.55 average odds. By the end of the night, I was able to finish with a small profit. I was lucky.

I shouldn’t have been able to get away with that – I should have lost my shirt. But by keeping a calm head and following Mike & others, I was able to turn a potentially very bad night for me into an OK one.

Michael Dent

Thank you to everyone who followed the betting prices at politicalodds.bet. I apologise for the server crash on 20 June and the fairly slow service during some of the most exciting moments of 23/24 June. We’ll be working on improving capacity for future events. In the next six months we’ll be closely following the Conservative leadership contest and the US Presidential Election.