Monday, 12 May 2014

Deciding the next election (1): the West Midlands in 2015

The West Midlands will be disproportionately important for deciding the next election. It holds 12 of the Conservatives' 100 most marginal seats and 13 of Labour's 100 most marginal seats. So it deserves particularly careful attention.

This is almost exclusively a Conservative/Labour battleground. The Lib Dems hold just two of these seats (both of which look very vulnerable) and are in second place in only two of the 25 seats that feature in the Conservatives' and Labours' 100 most marginal seats. The Lib Dems face the risk of being driven entirely out of the region at the next election. This in turn will make them focus exclusively on the few seats where they retain a chance of winning or remaining relevant. I therefore expect the swings against them in the marginal seats in this area where they are placed third already to be particularly large.

All the polling evidence suggests that 2010 Lib Dems who have so far deserted that party have broken decisively for Labour (and I use a working assumption that a net of a quarter of the Lib Dem vote in Conservative/Labour marginals should be added to the Labour tally). If, however, the 2010 Lib Dems are squeezed further, it is not at all clear to me that they should be expected to break in the same way - after all, they have remained loyal to the Lib Dems till now and the remaining Lib Dems have very different views from those who have already stopped supporting that party. For now I would assume that in seats where the Lib Dems are squeezed beyond normal levels, they will break evenly between Labour and the Conservatives, leaving my working assumption untouched for now. But I will continue to look for straws in the wind as to whether this is correct.

How have the West Midlands been doing in recent years? Not well. The West Midlands saw its share of total UK gross value added (GVA) decline from 8.0% in 2001 to 7.3% in 2011. It is very much being dragged down by Birmingham, which is possibly the worst-performing area of the entire country. I was shocked to find out that Birmingham has the second lowest employment rate of any local authority in the country (57.5%), ahead of only Middlesbrough. No wonder Channel 4 decided to shoot Benefits Street in Birmingham. South Northamptonshire's employment rate is 88.9%. Birmingham is less than 40 miles from Daventry.

Birmingham's unemployment rate at the beginning of the year was 17.3%. Unemployment for the country as a whole is hovering around 7%. In the most recent English Indices of Deprivation (from 2010 and currently being updated), it is the most deprived local authority in England in terms of income deprivation. Overall, it is the ninth most deprived local authority in England, taking into account income, employment, health and disability, education, skills and training, barriers to housing and services, crime and the living environment.

Without much media comment, Birmingham has entered serious decline. I'm shocked both to find this out and at the way in which the media have failed to report this. On this occasion, accusations of metropolitan media bias are fully justified.

Sadly, Birmingham's decline will not directly affect the outcome of the next election. The Conservatives hold none of the nine Birmingham constituencies and only the most marginal of the eight that Labour hold, Birmingham Edgbaston, is potentially relevant to whether or not the Conservatives got an overall majority. If the bookies are correct, however, the Conservatives can get an overall majority without Birmingham Edgbaston.

What of the region as a whole? The West Midlands metropolitan area’s share of the region’s GVA has declined since 2001 compared with the rest of the region. So the rest must be doing relatively better.

Gross disposable household income (GDHI) of West Midlands’ residents was one of the lowest among the English regions, at £14,400 per head in 2011. It ranged from £12,470 per head in Stoke-on-Trent to £17,360 per head in Solihull. Notably, it is the region of England with the most people of working age with no qualifications. The West Midlands also has some of the highest levels of obesity in the country, with Tamworth having been named as the fat capital of Britain.

Here is the ONS's take on the region:

Here are the region's constituencies:

As usual, I have put together a Conservative battleground (largely because the constituency odds on the Conservative side generally compare a bit more favourably with the odds on the Conservatives getting an overall majority or being largest party, as compared with the Labour counterpart odds) with a selection of other seat markets at the end.

As previously, the third column reflects the effect on the majority in Labour/Conservative marginals that would be had by allocating a quarter of the 2010 Lib Dem vote to Labour (the figure is derived by assuming that half will leave the Lib Dems and that these will break for Labour rather than the Conservatives in a 3:1 proportion).  I haven't bothered completing it for the safest Labour seats in this table since this would be a waste of time and effort.

The Lib Dems are largely out of contention. I regard both of their seats in this area as very likely lost and am on Labour in Birmingham Yardley and the Conservatives in Solihull.

UKIP are not yet rated in this area, being perceived as a party of the rural poor rather than the urban poor. Their shortest price in the area is 16/1 in Walsall North and Dudley South. If UKIP do well in the European elections in the West Midlands, as I expect, some of those seat prices will come in sharply. Taking long prices now could make you money after the European elections.

There are three seats with an underround: Cannock Chase, Tamworth and Birmingham Edgbaston. Cannock Chase seems to be trending Conservative over time, and I would place the Tory chances at near evens, so I have topped up my earlier bets on the Conservatives here (compare the prices in Warwick & Leamington, a seat with a very similar battleground). I have already backed the Conservatives at 1/2 a month or so ago. I have now taken the 4/1 on Labour as well for a near-guaranteed 15% return in a year. I can always make my mind up later where I think the true price should lie.

It will not surprise you to find out that I don't fancy the Conservatives' chances in Birmingham. I expect them to do disproportionately badly here and find the 7/2 on them in Birmingham Edgbaston bafflingly short. 7/1 would be closer to the mark. It follows that the 1/3 on Labour is good value, and certainly better value than the 1/3 on Labour in Wolverhampton South West. If you must bet on a Conservative gain, keep an eye on Dudley North - but I expect that the 11/2 will lengthen after the European elections.

I expect the Conservatives to do relatively better outside Birmingham. But the prices at present don't particularly attract me. I expect them to move in my preferred directions, so I shall hold fire for now.

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