Tuesday, 4 November 2014

The SNP battleground in November 2014

So far I've looked in turn at Labour, the Conservatives, the Lib Dems and UKIP.   And now it's time for my look at the constituency betting markets as they currently stand from the SNP's perspective.  But my original plans have had to be slightly modified.  I had planned to show all the parties as they stood as at 31 October 2014, to have a nice neat record of fully interlocking constituency odds tables.  But the prices in Scotland have changed so much in the last few days that to base a post on the prices then in place would be quite pointless.  So I've had to update the table to take account of these.  The prices used in this post are correct as of today's date.

Anyway, here is the table of all the Scottish seats, ranked in descending order of implied probability of the SNP taking them, as determined by the best odds available at the bookies:

To recap for first timers, this table is compiled on the basis that in aggregate the constituency odds are our best estimate of what's going on, while noting that there may be individual anomalies (otherwise known as betting opportunities).  The constituency odds factor those matters in to the best judgement of bookies and punters. By arranging constituencies by order of odds rather than majority, we can see how many seats gamblers expect the parties to take - or what the odds are that each party will take a given number of seats.

And we can see that the SNP are on a roll.  They are now rated as shorter than 5/6 in no fewer than 13 seats (5/6 being the bookies' conventional price for a 50:50 chance, allowing for their margin).  They are evens favourites in two more seats and joint favourites in one further seat.  They are 2/1 or shorter in a further 12 seats.  Punters regard them as serious contenders in at least 28 seats.

This is a rapid turnaround.  When I last looked at Scotland in early October, the SNP were listed at shorter than 5/6 in only the six constituencies that they already held, though they were longer priced favourites in a further three seats. They were rated at 2/1 or shorter in just four more seats:

As you can see from the commentary in this piece, I was wary that even with what appeared to be a substantial swing to the SNP in many cases the swings required might be beyond them, though I did see the potential for the SNP to break through and was cautiously betting accordingly.

Indeed, this improvement in the bookies' assessment of the SNP's chances is very recent indeed, and postdates the two stunning opinion polls from IPSOS Mori and YouGov indicating that the SNP had a large lead over Labour (and if IPSOS Mori is to be believed, a huge lead over Labour).  If either of those polls were borne out next May, even current prices on the SNP would represent outstanding value.  And that's the nub of it: if.  Will the SNP perform to anything like this level?

Sometimes it's important to recognise when we just don't know.  We don't and can't know what's coming next in this extraordinary period of Scottish politics.  There are two main uncertainties.  Will the SNP be able to maintain its current momentum?  Will Labour manage to pull itself together out of its awful mess in Scotland at present?  These two questions are interlinked. 

For what it's worth, this is my take.  If Jim Murphy is not elected Scottish Labour leader, then I am very doubtful whether either of the other two candidates has anything like the stature or ability to take on Nicola Sturgeon and Alex Salmond.  If Jim Murphy is, as is currently expected, elected Scottish Labour leader, I am very doubtful whether he can unite the Scottish Labour party behind him.  The unions are already openly mutinous and he is hardly going to appeal to Labour Yessers.  Adding the probability that Scottish Labour will elect a duffer and the probability that Jim Murphy will divide the Scottish Labour party, I make it only something like a 40 to 50% chance that Labour will get its act together.  It will be an uphill slog for Labour even if they are well led and disciplined. If I'm right, then the chances are that the SNP will continue to enjoy substantial leads in the Westminster polling and so they may well represent good value for their prices. I see no reason to assume that the recent polls will be a flash in the pan.

Importantly, the SNP have yet to select any candidates for next May. They clearly aren't counting on the personal attributes of their candidates forming a vital part of their prospectus in each constituency. Other parties will seek to use their candidates' greater familiarity to their advantage.

Why is this important? Well, it means that we can expect the SNP to progress (or fail to progress) in a reasonably consistent manner between seats.  Which leads me to some bets.

All bets are risky.  But bets in Scotland right now are only for those with the strongest appetite to risk.  In three weeks' time any of the following bets could look very silly from different directions.  I'm only betting with small stakes in Scotland for now.

Both Ladbrokes and Paddy Power have an under/over seats market on the SNP set at 20.5, offering 5/6 on each proposition.  That's a pretty sensible place for the line to be drawn right now, so far as I can tell, and the constituency markets are reasonably consistent with that, having regard both to the number of seats in serious play and to the extent of the likely correlations between performances in different seats.  If you wanted, you might try for a partial hedge by betting that the SNP will get under 20.5 seats and by backing the SNP in a seat like Aberdeen North or Linlithgow & Falkirk East.  The problem with this is that there isn't much reward and it could go wrong if the seat you chose bucked the trend.

This is one of those occasions where I think that it's best either not to bet or to back your own judgement properly.  Since it is my judgement that it is a little more likely than not that Scottish Labour will continue to flounder, I should bet on the basis that the current constituency markets underestimate the extent to which the SNP will make progress against Labour.  I have therefore backed the SNP at small stakes in Linlithgow & Falkirk East and East Kilbride, Strathaven & Lesmahagow.  Since I already have a bank of SNP longshots from earlier in the year, I don't feel obliged to plunge in deeper.  Just as importantly, I don't feel I need to close those longshots off yet.

SNP prices have shortened all round, not just against Labour.  Is that right?  I'm sceptical whether the SNP will make anything like as much progress in rural Scotland where the referendum was decisively defeated.  I appreciate that voters are quite capable of distinguishing between the referendum and who they want to represent them in Westminster.   But I see no reason for the SNP to be as short as 4/1 in Dumfriesshire, Clydesdale & Tweeddale, given that they have never polled well there and the area voted strongly No.  If the SNP take votes here, they will be from Labour.  So the Conservatives look good value at 2/5.

The SNP are now evens in Aberdeenshire West & Kincardine.  Aberdeenshire voted No 60:40.  This price seems to be based mainly on the SNP's strength in the rest of the county and because it won the area in the 2011 Holyrood elections.  To take this seat, it will need to take a good chunk of the personal vote of Sir Robert Smith, who is standing again next year.  The value bet in this constituency again seems to be the Conservatives at 3/1.  Again, I'm on for a small stake.

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