2020: where might the Conservatives go from here?

Yesterday I looked at Labour's position following the last election.  Today I look at the Conservatives' opportunities and challenges.

 

The Conservatives have been understandably euphoric about their unexpected overall majority.  This euphoria has strayed close to hubris at times.  Is it justified?

 

Here are the seats that they currently hold (ranked from most marginal to safest):

 

https://drive.google.com/file/d/0Bygi8eZw-4q1bFRCZUdFNWZRU00/view?usp=sharing

 

And here are their target seats, ranked in order of swing that the Conservatives require to take them:

 

https://drive.google.com/file/d/0Bygi8eZw-4q1OXNnMm53SDdsVTA/view?usp=sharing

 

I hope that these lists are fairly self-explanatory.  On the first list I have highlighted the majority in the colour of the party of the nearest challenger (I have used grey for the SNP because bright yellow is hard to read).  On the second list I have highlighted the seat and the majority in the colour of the party of the incumbent.  On the second list I have also asterisked the majority if the Conservatives are in third.

 

But remember, there may well be boundary changes which may or may not result in a reduction in the number of seats in the House of Commons.  In general these are likely, but not certain, to be to the benefit of the Conservatives.  These lists should therefore not be taken too seriously but do show how the next election will shape up in the broadest terms.

Let's look at the second list first.  The Conservatives' chances of substantial further gains look limited.  It is unusual enough for a party of government to get a swing to it after serving in power, and the swings required start to get quite large quite quickly.  The first 17 targets would fall to a relatively modest swing of 1.6% (that would give them a majority of 46) but double this swing would be required to take even 29 seats (and a majority of 70) on a uniform basis.  A historically unprecedented 5% swing to an incumbent government would yield 48 seats (and a majority of 108) on a uniform swing.  Even if the Conservatives stay in power after 2020, a landslide looks unlikely.

If the Conservatives are aiming to make further progress, they will need to improve their performance in London in particular, the location of seven of their top 20 targets.  And they would need to train their fire on Labour: only five of their top 50 targets are not held by Labour.

But it is much more likely that we will be spending the current years thinking about how vulnerable the Conservative-held seats are.  And there too, the main battle is with Labour, who are the main challengers in exactly three quarters of the top 100 seats.

With a majority of only 12, the Conservatives could lose their majority very easily.  A uniform swing of just 0.5% would wipe it out.  That's a hair's breadth. They should be able to remember that they are mortal without anyone whispering in their ears. 

Beyond that point, however, the Conservatives have built up decent majorities in their seats.  A 3% uniform swing against them would deliver only 29 seats to their opponents (and only 21 would transfer directly to Labour).  It would take a 4.7% uniform swing against them for the Conservatives to lose 50 seats, of which only 38 would fall to Labour.  The experience in 2015 was that the Lib Dems did not come close to retaking any seats where the Conservatives had broken their incumbency.  Ten of the Conservatives' 50 most vulnerable seats are Lib Dem held.  The Lib Dems may find it harder than Labour to get the swings required against the Conservatives to take target seats, given their particular past emphasis on incumbency.  Whether the Conservatives can keep these former Lib Dem seats may determine whether the Conservatives have most seats and whether the Conservatives remain in power in 2020.

But what is likely to be the critical seat count?  With the Lib Dems so diminished in numbers and in any case likely to be less well-disposed towards the Conservatives in future, the Conservatives have few potential supportive partners after the 2020 election.  If they get 305 seats or more, they will probably scramble home with support from the DUP, UKIP and/or the Lib Dems.  Fewer than that and the progressive parties are likely to be just too strong.

So the Conservatives probably need to restrict any swing to Labour to roughly 3% or less, and to hold onto their gains this time round from the Lib Dems.  Far from being invincible, Conservatives should have no particular expectations of retaining power in 2020.  It's going to be a hard fought battle.

The Conservative battleground in April 2015

Yesterday I looked at the constituency betting markets as they currently stand from a Labour perspective.  Today I'm looking at the Conservatives.  So here's the table of all the seats (as at 14 April) where the Conservatives' chances are ranked by the bookies between 1/16 and 16/1, ranked in ascending order of implied probability:

https://drive.google.com/file/d/0Bygi8eZw-4q1bVpaZjkycGo3d3M/view?usp=sharing

As I explained yesterday, such a table assumes 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.

Here are the milestone seats with the seat counts implied if the Conservatives take every seat in order of probability up that point:

350 Clacton (7/1)
340 Birmingham Edgbaston (5/1)
330 Thornbury & Yate (7/2)
326 Plymouth Sutton & Devonport (7/2)
320 North Warwickshire (3/1)
310 Weaver Vale (5/2)
300 Hastings & Rye (2/1)
290 Morecambe & Lunesdale (6/4)
280 Cheadle (6/5)
270 Great Yarmouth (5/6)
260 Rossendale & Darwen (4/6)
250 Elmet & Rothwell (4/7)
240 South Basildon & East Thurrock (8/15)
230 North Thanet (2/5)
220 Folkestone & Hythe (3/10)
210 Maidstone & The Weald (1/4)
200 Burton (1/6)

5/6, the price on the Conservatives for Great Yarmouth, is sometimes referred to as the bookies' evens (reflecting their need to build in a margin to make a profit), so it seems that the current central implied expected point for the Conservatives is around 270 seats. 

For an overall majority, the Conservatives would need 326 seats.  The 326th seat is Plymouth Sutton & Devonport, for which the Conservatives are priced at 7/2.   As of this morning, you can get just under 9/1 with Betfair on the proposition that the Conservatives will get an overall majority, with good liquidity above 8/1.  The seat markets are by and large for the birds in this vicinity.  I would not consider backing the Conservatives in any seat at these odds without the most outstanding intelligence that the Conservatives were doing far better in the seat than was widely understood. If you think that the Conservatives stand an earthly chance of an overall majority, back that proposition directly on Betfair.
 

As I noted yesterday in relation to Labour, it's less clear how many seats would be required for either main party to have most seats.  Both parties are priced in the constituency markets at 5/6 to get their 270th seat.  Yet Labour are 15/8 on Betfair to get most seats while the Conservatives are 8/15.  These two markets are completely detached from each other.

It follows that there is an indirect hedging strategy, which is to back Labour on the most seats market and to back the Conservatives in the seats which they would need to take from Labour if they were to get around 270 seats.  Such seats would include Worcester, Blackpool North & Cleveleys, Pudsey and Ipswich, for example.  If you back a suitable selection according to taste, you would be unlucky to come out behind and if you were  lucky (or skilful in choosing your Conservative bets) you might win on both sides of some of the bets.
 

Another important milestone seat is Eastbourne (7/4), which is the 295th seat.  This probably represents the practical minimum for the formation of a Conservative government, with David Cameron as Prime Minister.  Yet you can still lay David Cameron on Betfair at odds on to be Prime Minister after the next election.  Another indirect hedging strategy is to do just that and to back the Conservatives in seats like Stroud, Eastbourne, Cannock Chase and Carlisle.  Get the right seats and you might again come out ahead on both sides of the bet.

Obviously for both of these strategies there is the risk of losing on both sides of the bets.  But that would be seriously unlucky (or you would have chosen poorly when you picked the seats in which you had backed the Conservatives).

If you want to play things more simply, just lay David Cameron for next Prime Minister, which is what I have done.  He should be at least 7/4 for that proposition if the constituency markets are to be believed. To be able to lay him at odds against is incredible value.

Or, if you disagree and think that the Conservatives are going to get most seats, look in the 270 to 310 band of seats.  If you are right, this is where you will find the best value on the constituency markets. 

I already have a book of Conservative relative longshot bets from the last year, and now I'm looking at the value at the other end of the scale.  Redditch at 2/7, Sittingbourne & Sheppey at 3/10 and Crawley at 3/10 all look safe enough to me, and I've backed the Conservatives in all of these.  I'm not expecting the Lib Dems to come close in places like Maidstone & The Weald either, despite rumours of private Lib Dem polling showing them doing well: 1/4 looks like a good price here too.

Testing the boundaries (1): Conservatives vs Labour

In the last couple of posts, I've seen how there are multiple axes of British politics and I've looked at what the markets expect to happen.  A party may perform well on one of these axes and poorly on another, since there is no obvious correlation between some of the battles.  In the next couple of posts, I shall consider the ways in which the market could be wrong and what bets might be worth considering as a result.

Conservatives against Labour

The markets are assuming at present that Labour will take a substantial body of seats from the Conservatives.  Here are the Labour targets organised by swing:

https://drive.google.com/file/d/0Bygi8eZw-4q1eXB4WmVIWloxMTA/view?usp=sharing

This is in fact not the first time that I have looked at this table.  I looked at this in April, here:

http://newstonoone.blogspot.co.uk/2014/04/the-crimson-tide.html

It can be seen that in general Labour's prices have strengthened against the Lib Dems in their target seats, weakened against the Conservatives, weakened rather more wherever UKIP are seriously involved and drifted as if carried by a riptide whenever the SNP are involved.

To get an overall majority, Labour would need a swing that took every seat up to and including Norwich North (and not lose any of their own seats - something which now looks distinctly unlikely given the sharp rise in SNP support in Scotland).

Let's organise these seats by the odds on Labour taking them, and concentrate just on those seats which are Conservative-held.  That leaves 103 target seats:

https://drive.google.com/file/d/0Bygi8eZw-4q1eEdGUUdnZS1QcW8/view?usp=sharing

Viewing them from the other side of the equation, here they are organised by the odds on the Conservatives keeping them:

https://drive.google.com/file/d/0Bygi8eZw-4q1SWdoU1dyMGtfYzg/view?usp=sharing

As you can see, these tables differ considerably.  For judging how Labour and the Conservatives do against each other, the Labour table is more helpful, because the top of the Conservative table includes seats where UKIP are well-placed.  But you need to look at both.

As a general rule, the more out of place the seat is by reference to its target number, the more consideration you should give to the idea that it is mispriced.  Some of the movements are explicable by constituency polling, by the expected impact of UKIP or by the presence of a large squeezable Lib Dem vote.

On this last point, I attach a table setting out the impact of reallocating the Lib Dem vote on the basis that half of it is cast for either Labour or the Conservatives and that it breaks 3:1 in Labour's favour.  You can argue about what proportions to use, but I used this rule of thumb in the summer and it still seems convenient to me:

https://drive.google.com/file/d/0Bygi8eZw-4q1ZWk1R1h3cTYxVlE/view?usp=sharing

The battle

If all the other seats go with the odds, Labour and the Conservatives will each gain around 10 seats from the Lib Dems.  The Conservatives are set to lose five seats to UKIP and Labour are set to lose seats to the SNP (but on a day when an opinion poll has been published that would give the SNP 34 Labour seats on a uniform national swing, I'm not inclined to use the constituency odds to make predictions on that front).

Let's be cautious about Scotland for now and assume that Labour are going to lose about a dozen seats to the SNP.  That means that they would need to take somewhere around 70 of the seats on their list of targets for an overall majority.  Cleethorpes is the 70th seat on this list, with a Labour price of 5/2.  For most seats, Labour would need to take around 30 seats on this list on that same assumption.  That seat is Ipswich, with a Labour price of 4/6.

So what if the Conservatives do rather better against Labour than expected (I'll treat that as being covered by Labour's 20th to 35th most likely gains) and what if they do rather worse (I'll treat that as being covered by Labour's 60th to 75th most likely gains)?

Lord Ashcroft has taken a poll of every seat in the first of these bands.  Labour were ahead in every single seat except for Pudsey (which showed the Conservatives winning on a photo finish).  If the Conservatives are to get most seats, they are going to have to take at least a few of the seats in this band.  If the bookies' odds for the general most seats market are to be believed, this is an even money shot (11/10 on Betfair still though).  Yet their shortest price is evens in only one seat (Wirral West). Either the evens available on Labour for most seats with William Hill is value or some of these constituency prices are worth a shot.  Personally, I think the answer is the Labour price with William Hill, but if you disagree (and even if you don't), the 11/8 on the Conservatives in Pudsey on what looks like an even money shot on the limited specific evidence that we have available looks like a decent bet.

What if Labour do rather better?  So far, the only constituency polls we've had in this higher band are in Thurrock, Watford and Great Yarmouth - all seats with third party interest.  I don't propose to look at complex seats of this type in this post anyway (so I shall also ignore Cleethorpes and Dover).

For the rest, we're thrown back on general principles. Filton & Bradley Stoke has a large Lib Dem vote, but the Conservatives have a large majority.  At 1/3, the Conservatives look like value.  If Labour win this seat, they should be getting a good overall majority.  Right now, that looks unlikely and more than 3/1 unlikely.  And indeed, there is nothing in the marginals polling that I have seen that gives any indication that any of the Labour prices in this segment represent value.  If you must bet on a Labour overall majority, do so via the general markets where you can get 9/2 on the proposition with Ladbrokes or Bet365.  I won't be doing that though.  The prices all round look far too short.

Other seats to note

 

Are there any other seats which have prices that look out of line?  The Conservatives look value in Portsmouth North at 4/5 given the size of swing required.  This price seems to be driven by the decision to close the Portsmouth shipyards, but the constituency poll in the adjacent Portsmouth South constituency shows the Conservatives taking that seat, so this may be overdone.

The Conservatives are priced at 5/2 in Hove and 13/8 in Brighton Kemptown.  Lord Ashcroft conducted polls for both of these constituencies on the same day, finding that Labour had a lead of 3% in Hove and 4% in Brighton Kemptown.  These should not be priced so far apart and the 5/2 in Hove looks fair value, given the uncertainties of any opinion poll (never mind a constituency poll) and given that the poll did not name the individuals contesting the seat.  Don't stake fortunes on the basis of constituency polls though.

On the other side of the fence, Stevenage also looks out of place.  The 13/8 on offer looks like decent value to me.  There's no iron rule that says that Labour can't take a seat in southern England.

When I looked at London in the summer, I tipped Labour in Finchley & Golders Green.  Lord Ashcroft has since polled various north London Conservative/Labour marginal constituencies.   In his polls, Labour are recording a 8.5% swing in Hampstead & Kilburn, a 7.5% swing in Hendon and a 7% swing in Enfield North.  Labour need a swing of just over 6% to take Finchley & Golders Green (which is sandwiched between Hampstead & Kilburn and Hendon).  They're still priced at 3/1 to do so and I've topped up again.

The Conservative battleground in November 2014

Yesterday I looked at the constituency betting markets as they currently stand from a Labour perspective.  Today I'm looking at the Conservatives.  So here's the table of all the seats where the Conservatives' chances are ranked by the bookies between 1/16 and 16/1, ranked in ascending order of implied probability:

https://drive.google.com/file/d/0Bygi8eZw-4q1ZFlCRk1LdlVSR00/view?usp=sharing

As I explained yesterday, such a table assumes 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.

The Conservatives are currently expected to lose seats if the constituency markets are to be believed.  The Conservatives are priced at 5/6 in Warwick & Leamington.  5/6 is the price that bookies often use for a 50/50 chance, allowing them to build in a margin for profit.  If the Conservatives take the seats up to and including Warwick & Leamington and no more, they will suffer a net loss of 45 seats, leaving them with 262 seats (I'm assuming for now that Rochester & Strood will be worse than a 5/6 shot for the Conservatives at the next election, which seems a safe enough assumption today).  With Labour's 5/6 shot giving them 307, the two main parties are currently assumed by the markets to have an almost exact reversal in seat counts.

How do the constituency prices compare with the overall majority and most seats markets?  If the Conservatives held all their 2010 seats and took every other seat that is shorter priced, they would have 343 seats (I shall assume for present purposes that Rochester & Strood will be priced at 3/1 from a Conservative perspective - it's likely to be shorter than Clacton but not by much).  To get an overall majority, the 326th seat (as ranked by odds) would be Waveney at 10/3.  That compares with 5/1 that you can get with Betfair that the Conservatives will get an overall majority and 4/1 that is available with Ladbrokes and Coral, among others.  When you also factor in the danger that you might select a constituency that bucked the trend, all the value if you think that the Conservatives might win an overall majority is simply to take that overall majority bet rather than go into the constituency markets.

How about the most seats market?  A lot depends how many seats you think would be needed for that tally.  If the Conservatives took Carshalton & Wallington and all the seats with shorter prices than that seat, they would have 300 seats.  Carshalton & Wallington is a 7/4 shot.  Everything up to and including Nuneaton would give them 290, and that's a 13/8 shot.  City of Chester is the 280th seat, and that's a 5/4 shot.  Meanwhile, you can get 6/5 with Paddy Power among others on the Conservatives having most seats and 5/4 on Betfair.

If Labour and the Conservatives perform as the markets currently expect, Nuneaton is the hinge seat, being the 290th in order of implied probability for both of them.  That 13/8 looks good as compared with 5/4.  If you think that 290 is indeed going to be the critical level, you probably could not do better than choosing Nuneaton or Bury North as your bet, since both are about as typical Labour/Conservative marginals as we get in these increasingly fragmented days.

But let's think a bit more about the relationship between the general markets and the constituency markets.  We saw yesterday that for Labour we would do better backing them at the overall majority market or the most seats market than by backing them in constituencies.  We see today that we would do better backing the Conservatives at the overall majority market rather than by backing them in constituencies.  Why is this happening on both sides of the fence?

The answer, I think, is because the contingencies between constituencies are thought to be becoming less correlated.  We don't actually know whether that is true.  It seems to me possible that both Labour and Conservative overall majority bets may offer better value than is presently appreciated.  Of course, value bets are often losing bets, and as a longterm backer of No Overall Majority, I'm not going to change my tune now when both major parties look in pretty ropey shape with six months to go before a general election.  But the point is worth noting.

There is a further point specific to the Conservatives.  We have seen that the constituency markets offer better value than the most seats market and worse value than the overall majority market.  This means that we should be very wary indeed of backing the Conservatives in any seat priced between the 5/4 of the Betfair most seats market and the 5/1 of the Betfair overall majority market, particularly at the longer end of that spectrum, since such seats seem much more likely to offer bad value, given the simpler bet that one can make on an overall majority.

I last looked at the Conservative position in June:

http://newstonoone.blogspot.co.uk/2014/06/the-conservative-battleground-june-2014.html

The 290th seat then was priced at 6/4, so slightly shorter.  The 326th seat (still Waveney then) was priced at 3/1 - again, slightly shorter.  So there has been a slight lengthening of Conservative odds, but nothing stark.

Are the constituencies becoming less correlated, and if so, why?  I think that they are, despite what I said earlier.  In 2010, the Conservatives had two sets of battles: with Labour and with the Lib Dems.  The dynamics of each were different.  In 2015, the Conservatives will add a third front with UKIP.  Meanwhile, in Scotland, the SNP are currently posing far more of a threat to Labour than they did in 2010, giving Labour a third front also.  These two new third fronts are only loosely related to the older fronts, and the table above caters much less well for those loose correlations than the differential correlations that previously operated.

I looked yesterday at Labour's exposed Caledonian flank and dealt with it effectively by taking the Scottish seats out of the equation and making a more general assumption about them.  That type of approach will not work with the Conservatives and UKIP.  First, UKIP pose a threat to the Conservatives across a lot more seats, albeit at a lower level and in all probability taking fewer seats.  Secondly, the impact of UKIP on Conservative chances is more indirect in most seats.  Waveney is a good example - the Conservatives have drifted slightly in Waveney because, with UKIP strengthening, what was already a difficult seat for the Conservatives has become in the punters' eyes still harder.  Labour have not seen their price shorten - the opposite, in fact.  But the arrival of UKIP has meant that both Labour and the Conservatives have seen their prices lengthen.

Anyway, do I have any other constituency tips?  Well, as it happens, I do.  To get an overall majority, Labour would need to take seats like Vale of Glamorgan, Rossendale & Darwen and Crewe & Nantwich.  Labour are priced at 5/2 to get an overall majority.  If, like me, you believe that to be rather too short, you can lay it by proxy by backing the Conservatives to take such straight Labour/Conservative marginal seats at prices like 8/15.  I like backing 2/5 propositions at 8/15 and I like backing 1/3 or greater propositions at 8/15 even better.

It is possible that Labour could take these seats and not get an overall majority (one set of circumstances might be that Labour lose a slew of seats to the SNP but perform well south of the border).  My take is that if Labour are performing that badly in Scotland, the chances of them doing well enough to get what would otherwise be an overall majority winning performance in England and Wales in standard Labour/Conservative marginals are low enough to make these bets still stand as decent proxies for that bet.  Make your own mind up, of course.

I will deal with the Conservatives' prospects against the Lib Dems tomorrow, and the impact of UKIP on Monday.

The Conservative battleground June 2014 update: the sorting

The constituency markets have changed considerably in the last couple of months, so I thought it was time to have another look at the seats ranked by odds. I've presented these in the form of a Conservative battleground. I've included every seat in the top 75 Conservative targets (where there is a market), every seat in the top 100 most marginal Conservative seats, every other seat where the Conservatives are priced between 10/1 and 1/10 and selected other seats:

https://drive.google.com/file/d/0Bygi8eZw-4q1Y1N1M1dYMkxqTHc/edit?usp=sharing

Since last time, there have been three trends: two absolutely clear, one a little more tentative. First, the prices on the Conservatives have generally shortened in Conservative-held seats and Lib Dem held seats.  Secondly, the Conservatives have generally lengthened in Labour-held seats (this is a little more tentative because some of this movement is down to Paddy Power now listing constituencies - Mr Power seems to take a more pessimistic view of Conservative chances in many constituencies than Ladbrokes).  As a result, the red in the table looks much more sorted towards the top than the last version of this table.  It seems that the bookies and punters put a heavy weight on incumbency.

If you want to, you can compare and contrast how things have changed via this post from April (I haven't directly linked to the table itself because I figured it would be too confusing having links to two very similar tables in a single post):

http://newstonoone.blogspot.co.uk/2014/04/the-conservatives-overall-chances.html

I suggest that you do take the time to look through both tables.  There have been some fairly striking moves.

What's the net of all these changes?  Well, if these seats fall in the order of the odds in this table, the Conservatives would have an overall majority if they took Waveney.  That's a 3/1 shot.  When I last looked at this in April, the golden seat was Yeovil and priced at 10/3.  So overall prices have come in a bit for the Conservatives on this proposition.

As I write, you can get a best price of 11/4 with Ladbrokes or Betfair on the Conservatives gaining an overall majority.  So there is a small advantage in backing the Conservatives in individual markets, but it's not sensational.

What about most seats?  This is harder to judge because that depends on how many seats you need, which is not set in stone.  In April, comparing the Labour battleground with the Conservative battleground (each arranged by odds) showed that 290 was the magic number.  The Conservatives get 290 seats if they take these seats in the order of their odds up to and including Aberdeenshire West & Kincardine, which is priced at 6/4.

Again, this price has come in a bit.  In April, the 290th seat was priced at 7/4.

The gap between the implied odds from the constituency market and the express odds for Conservative most seats is significant: the best price you can get on the direct bet on Conservative most seats is evens (this is widely available).  The conclusion, therefore, is that if you want to cover the possibility of a Conservative overall majority, there's a bit of an edge in using the constituency markets, but it's not huge.  However, to make a play on Conservative most seats, do so through the constituency markets.  This is quite clear cut.

Anyway, are there any bargains?  It will be apparent from the above that we should be looking for bargains in the evens to 7/4 range (and if you're so inclined, counterbalancing those bets with a bet on Labour most seats at 10/11 with Bet365 and Stan James in such a way as to maximise your exposure to a Labour victory or a Conservative victory according to taste). For seats in this band, you should probably start from the assumption that the price is good unless you have a clear reason for believing otherwise.

In the left column of the table I've included the ranking of the seat by Conservative target or marginality - an asterisk means that it's either outside the top 75 Conservative targets or outside the top 100 most marginal Conservative seats.  Where seats are ranked by odds a significant distance from other seats of similar marginality, antennae should prick up.  Sometimes there's a good reason (South Thanet, for example, where UKIP throw the seat into confusion, though I still like the Conservatives at 7/4 as it happens) but sometimes the reason isn't obvious.  City of Chester stands out.  So does St Ives.  I'm on both of these.

Outside this band, Somerton & Frome at 1/2 looks a solid bet. Some of the very short priced bets on the Conservatives look like a good way of making low risk returns closer ito the election - 1/6 on the blues in Basingstoke is really good value.

But you need to plough through this list for yourself.  Happy hunting.

The untactical right: Conservative voters in Lib Dem/Labour marginals

I have mainly concentrated on the Labour/Tory battleground. I make no apology for this: this is where the election will be decided and this is where most of the constituency betting opportunities are. But for completeness, I ought to put up a brief post on the Lib Dem/Labour marginals.

I have already looked at the likely behaviour of 2010 Lib Dems in these seats. I came to the conclusion that those voters who have defected to Labour have made their minds up and will not be returning. This leaves the question whether the Lib Dems can encourage more Conservative supporters to lend them their votes.

In favour of this notion, Tories who had previously thought that the Lib Dems were surrogate socialists may have changed their minds following five years of coalition. Some prominent Lib Dems have enthusiastically made the case for austerity - Danny Alexander for one. (Others, however, have been Hamletesque in their public anguishing over getting into bed with the evil Tories.)

Historically, the Lib Dems have not had much success at this (in stark contrast to their ability to harvest Labour tactical votes when they are competing with the Conservatives).  I attach a list of the Lib Dem seats where Labour are in contention:

https://docs.google.com/document/d/1_E2fZ0culEKFsCzmrCCLAfLra1gTv6rSmoOEpfpenSg/edit?usp=sharing

The average Conservative vote share in these seats is nearly 19%.  Admittedly, four of these seats have Conservatives in second place at present, but even without those four, the average is still 17%.  The Conservative vote in these seats has remained resilient.

To date, the polls have betrayed no hint that such Conservative voters are amenable to the idea of tactical voting, but that is not necessarily that informative, since these voters have not thought about the idea before and they may not have processed the concept as yet this time either.  Will they do so this time around?

This is one of the unknowns of next election. My default expectation is that we will not in general see the Lib Dems tap into this potential voting resource. Too many Lib Dem MPs have been publicly too lukewarm about the coalition to inspire any kind of affinity from Conservative supporters. Before 2010, many Labour supporters saw the Lib Dems as a kid brother to their own party. The Lib Dems in general have done too little to inspire a similar light affection in the minds of Conservative supporters.

As an added disadvantage, with the heavy swings against the Lib Dems, in many seats Conservative supporters will reasonably conclude that the Conservatives stand at least as good a chance as the Lib Dems of getting elected. Why vote for ginger beer rather than champagne when champagne is also on the menu?

Some MPs may be able to appeal credibly for tactical Tory support. Anecdotally, Danny Alexander and Nick Clegg have both been seen as positive contributors to the coalition by Conservatives. Nick Clegg hardly needs the votes, but Danny Alexander does. But his is a constituency where the Conservative vote has already fallen to a relatively low 13.3%. I am doubtful whether he can get that all that much lower.

In summary, while this in theory looks like a tempting source of votes for Lib Dem incumbents, in practice I think they are going to find these voters tough going to convert. I'm very bearish about Lib Dem chances in such seats in general and so my betting approach is generally to be very cautious indeed about backing Lib Dem chances in such seats, and to consider strongly backing Labour challengers in these seats even where large swings are required. Having lost the casual affection of many left of centre voters, they have failed to gain in compensation the casual affection of right of centre voters. There is only so far that a personal vote can take you. If the Lib Dems are holding half of these seats this time next year, they will have done very well indeed from the current starting point.

The hunt for 2010 Lib Dems. Part 3: Conservative/Labour marginals

In 2010, Britain was swept by Cleggmania.  Off the back of a highly successful air campaign, the Lib Dems attracted new voters up and down the country.  Unfortunately for them, they mainly did so in seats where they had no prospect of success and they actually lost seats to the Conservatives, falling back from 62 seats to 57 seats.

So the Lib Dems had a substantial vote share in the Conservative/Labour marginals where the next election will be decided.  Much attention has been placed on this group.  The Lib Dems have declined sharply in the polls and these votes will play a big part in the outcome of the next election.

First things first, how many of them are available to be snaffled by rivals?  As I noted yesterday, Lord Ashcroft found that they had declined in the 32 most marginal Conservative/Labour seats by just over half, matching the decline in the national opinion polls.  In seats where the Lib Dems are not seriously campaigning, it seems that they may lose votes in proportion to their national loss of vote share.  This isn't going to be precisely accurate, but uniform national swing clearly doesn't work when we're looking at such dramatic falls in support, so I propose using that.

In those same 32 most marginal Conservative/Labour seats, the Lib Dems averaged 17.5% of the vote.  So on average this puts 9 or 10% of the vote in play, regardless of other voter movements.  That's a big chunk.   In some constituencies, the numbers in play will be substantially bigger.

How these voters have divided between other parties is unclear - different polls have different findings.  Those that have expressed a preference are dividing 2 or 3 to 1 in favour of Labour over the Conservatives, with a non-trivial number going to UKIP.  Anything up to 40% of these voters still don't know how they are going to vote.

Putting these movements into a typical seat, we find that of our 17.5% Lib Dem vote share, Lib Dem don't knows comprise 7% of the electorate, Lib Dems comprise 5%, Labour 3 or 4% and the Conservatives 1% or so.  So there has been a swing to Labour on these voters alone of 1 to 1.5% of all voters (probably closer to 2 to 2.5% of decided voters).  And that's without taking account of any other improvements in Labour support or declines in Conservative support from the last election.  This is a big bonus.

Because of this effect, much attention has been paid to the Lib Dem to Labour switchers.  Are they likely to return to the fold?  In short, no.  All the polling (and anecdotal evidence) suggests that this group comprises the most zealous supporters of Ed Miliband, matched only by an intense dislike of the Conservatives in particular.  I shall look separately at vulnerabilities in Labour's vote, but there's no vulnerability here.  These voters are going to be trooping out next May to vote Labour and will be in danger of pushing the pencil through the ballot paper in their vehemence when they mark the cross.  If these voters do not vote Labour, it will to inflict maximum damage on the Conservatives. A decline in the number of Lib Dem to Labour switchers would not be good news for the Tories: it would mean that Lib Dem incumbents were likely to do better.

There's a big betting point here.  The bigger the Lib Dem tally at the last election, the more of an in-built swing we can expect to see to Labour in Conservative/Labour marginals.  I have prepared the following table of Conservative defence seats where Labour are in contention.  I have added a column where I have notionally allocated a net 25% of the Lib Dem vote tally to Labour, and ordered the seats in order of the notional majority on that basis.  This equates to half the Lib Dem voters switching, and doing so in the ratio 3:1 Labour: Conservative.  I'm open to debate on the exact figures, but this seems a fair starting point to me:

https://docs.google.com/document/d/1mEvLhpFYXrdpeHs2EAg_K--O5PxYcBoWDwlHuI99iRI/edit?usp=sharing

Where I have put "MAJORITY" in block capitals, Labour would have taken the seat.  So Labour would have won a further 26 seats on this basis.  That would have been enough to have made them largest party at the last election.

It will be apparent from this table that some seats are seriously mispriced.  It repays very careful study.  On this basis, I would rather back the Conservatives to keep Enfield North where Labour need only a 1.91% swing but only 12.2% of the electorate voted Lib Dem in 2010 than backing them to keep Northampton North where Labour need a 2.41% swing but 27.9% of the electorate voted Lib Dem in 2010.  Yet the Conservatives are 11/4 in Enfield North and 5/4 in Northampton North.  These odds are in the wrong order.  There are many similar examples.

And of course, this is just from the starting point of the last election.  Labour will hope to gain other supporters and to see the Conservatives fall back.  However, I suggest this table makes a more reliable guide to the starting point for the next election than looking at the unadjusted results last time around.

In my next post, I shall draw the threads together and try to establish some principles for handling the sharp drop in the Lib Dem vote when considering these markets.

The Conservatives' overall chances: putting together the pieces

It is important to understand that Labour's chances of making gains and the Conservatives' chances of defending their seats, while related, are not identical. We can infer Labour's chances of securing an overall majority or most seats with some confidence from the list of its targets. But we cannot simply look at the list of seats that the Conservatives are defending and do the same thing. It is obvious that a party that holds seats already does not just aspire to gain seats, they must also defend what they have.

 

In the case of Labour, that's a largely theoretical distinction, because only a handful of seats that they hold are more likely to be lost than seats that they covet are likely to be won. But for the Conservatives, the position is a lot more complicated. The complicating factor is the likely decline of the Lib Dems. The Conservatives are currently expected not just to lose seats to Labour, but also to gain seats from the Lib Dems.

Many who have looked at this market have looked only at the seats that the Conservatives might lose without considering the seats that the Conservatives might gain. This is a serious mistake. To set this right, here are the Conservative battleground seats, arranged by odds:

 

https://drive.google.com/file/d/0Bygi8eZw-4q1ZTR6RFdkZmlia1k/edit?usp=sharing

The big point to note here is that quite a few of the seats currently held by the Conservatives are rated as less probable Tory wins than seats that they are targeting. 37 Lib Dem or Labour seats come in this category, meaning that if the Conservatives achieve what we might call a uniform odds swing such that they retain all their existing seats up to and including Thurrock, they would have a comfortable overall majority. The magical 326th seat would be Yeovil, which they would win at odds of 10/3. This is more or less the same as the odds on Betfair on a Conservative overall majority, which can be backed at 4.2 (16/5). So there is no great advantage to backing the Conservatives in individual constituencies as opposed to backing the Conservatives on Betfair.

 

Similar observations can be made about the Conservative most seats market. It's unclear how many seats would in practice be required. The 305th seat would be Brighton Kemptown at 9/4. The 300th seat would be Bedford at 2/1. The 290th seat would be Elmet & Rothwell at 7/4. There's a bit of an advantage over the Betfair most seats prices (currently around 5/4), but it's not overwhelming.  That Betfair price equates to the 283rd seat by swing - which given the current seat division between Labour and the Conservatives would have been just enough to give them most seats.  Of course, 283 would not be enough this coming time on the implicit assumptions in this table, because the Lib Dems would have far fewer seats.

 

So by all means prefer to bet on the Conservatives in the constituency markets rather than the general "most seats" markets for better value, but don't kid yourself you're getting amazing value.  It's just a little better.  By the time you get to the levels required for an overall majority, there's not much additional value to be had at all.

 

Where is the crossover between Labour and the Conservatives?  For that we need to compare the Conservative battleground with Labour's targets:

https://drive.google.com/file/d/0Bygi8eZw-4q1SE5ocHYwcVFaSkU/edit?usp=sharing

 

If Labour take Halesowen & Rowley Regis (and every seat before that on their target list) and the Conservatives take Elmet & Rothwell (and every seat before that on their defence list), both will have exactly 290 seats.  So there's the pivot point, if the bookies' odds are right.

In the blue corner: how do the Conservatives shape up to resist a Labour advance?

Yesterday I considered the prospects for Labour gains.  Today I want to look at the other side of the coin, how the Conservatives are placed to defend their current seat tally.  This is not quite the same question, because Labour have the prospects of gains from the Lib Dems, while the Conservatives are sitting on some tiny majorities over the Lib Dems also.  But the main action is blue on red.

Here are the Conservative seats ranked in order of increasing majority:

https://drive.google.com/file/d/0Bygi8eZw-4q1MEFsUHpicXE5V1E/edit?usp=sharing

The first thing that leaps out is how well the Conservatives did in close battles.  They won 18 seats with a majority of less than 1,000 and 18 seats with a lead of 2% or less.  So even a 1% swing away from the Tories would be a real struggle for them.  And that's leaving aside the fact that voters seem to have moved between the parties in some pretty non-standard ways this time round, which may not be particularly to the advantage of the Conservatives.

Just a note on the colour coding.  The colour of the majority represents the nearest challenger: red for Labour, gold for Lib Dems and grey for the Wyre Forest hospital chap.  As you can see, six of the top 20 most marginal Conservative seats have a Lib Dem as the closest challenger last time around.

Note, the prices have moved on during the week, so the odds on the Conservatives in a few seats (eg Morecambe & Lunesdale) are not directly comparable.

Anyway, let's look at this in terms of bookies' odds:

https://drive.google.com/file/d/0Bygi8eZw-4q1UXZyZUpkT1JLbjA/edit?usp=sharing

And once again we see a transformation.  The bookies have more or less written off the Lib Dems' chances of making any gains against the Conservatives.  We see the Lib Dem seats slump to the bottom of the table.  The only gold on the first page of this table is Watford, and that's because Labour finished a close third.  And it's a similar story on the second page.  Both Colne Valley and Bristol North West have Labour in a not-too-distant third.  The first seat on this list in which the Lib Dems are second favourite is Camborne & Redruth, where the Conservatives have a micro-majority of 92.  Even there, the Conservatives are priced at a very short 8/15.

The opposite is the case for Labour.  The Conservatives are odds against in 44 seats on this list. If they lost all of those without making any other gains, their chances of staying in power would be remote.  They are quoted at odds of more than 2/1 in 25 seats that they currently hold.

The basic question is whether you think current polling is a reliable indicator of the result in May 2015.  It has to be the starting point for our thinking, even if we apply adjustments for how polling might move.  But where might we expect to see the Conservatives do disproportionately well?

In the red/blue contests where I am considering a bet on the Tories, I look for constituencies with a fairly low Lib Dem tally and where the Conservatives and Labour have a relatively high share of the vote.  Such constituencies can be expected to have fewer protest voters of the type that might be attracted to UKIP and fewer Lib Dem voters who are likely to be backing Labour.  On that basis, Morecambe & Lunesdale looks fair value even at 3/1 despite its tiny majority (compare and contrast Lancaster & Fleetwood), as does Stockton South at 7/2.  Both seats have first time incumbents (historically first time incumbents of any party tend to outperform their party at elections, having built up some personal loyalty), and indeed this is a consideration that should help the Conservatives in many of their marginals this time around.  Wolverhampton South West at 3/1 is worth considering for the same reason.  Cannock Chase, despite the best efforts of its MP, is worth nabbing at 11/5 with Paddy Power.  Ladbrokes rate this an evens shot and I think Ladbrokes is much closer to the mark.  This seat seems to be trending Conservative.

Generally I'm much less attracted by the shorter priced Conservative seats.  It's unclear how the Lib Dem vote in particular is going to distribute itself.  The short prices have hidden risks that are not fully priced in, in my view. I have, however, taken the 1/2 on the Conservatives in Tamworth.  The Lib Dem vote share there is relatively low.

Two seats, Thurrock and South Thanet, have a substantial intervention from UKIP.  I shall look at the possible impact of UKIP separately.  But I'll note now that betting on the Conservatives in both these seats at present prices needs to be carefully weighed.

What haven't I talked about in this thread?  I have studiously avoided talking about looking at the seat market for a proxy for a Conservative overall majority or Conservative most seats bet.  We need a separate table for that.  I'll look at that tomorrow.

Once in a blue moon: first cut on the chances of a Conservative overall majority

I'm working my way up to the central battleground between Labour and the Conservatives, but let's keep skirting round the edges for now. The Conservatives entertain hopes of an overall majority, despite being behind in the polls at present. But what do the bookies make of their chances?

 

If you were to go onto Betfair today, you could back the Conservatives for an overall majority at 4.3 (100/30). But what of the constituencies that would make up that hypothetical majority? Here are the constituencies that the Conservatives would need to make inroads into if they were to achieve an overall majority:

 

https://drive.google.com/file/d/0Bygi8eZw-4q1aXdyMFd2MGwzcnc/edit?usp=sharing

 

The Conservatives would need to take a minimum of 19 to get a majority. Measured by size of majority, the bookies aren't remotely convinced. Number 19 on this list is Newcastle-under-Lyme, and the best price that you can get is 8/1. But let's sort them by odds instead. And here a very different picture emerges:

https://drive.google.com/file/d/0Bygi8eZw-4q1VVVzb3dlblRob3c/edit?usp=sharing

 

It seems that the bookies regard the Lib Dems as much easier pickings than Labour-held seats. As if by magic, the yellow rises to the top. The first 21 seats on the list are all Lib Dem held, and are at prices of 2/1 or less. Seven of these are seats that don't even feature on the first list at all, being outside the Conservatives' first 75 targets as measured by size of swing required. If the Conservatives could hold their existing seats and take these 21 seats, they would have their overall majority. I shall come back in a separate post to the question whether that is a sensible way of judging the respective merits of a 2/1 constituency bet on Carshalton & Wallington against the 100/30 of the Betfair price on an overall majority (spoiler: it isn't). Are these prices sensible? I shall be coming back to this question in later posts.

 

 But I note that on today's ICM poll, where the Conservatives polled 32% and the Lib Dems polled just 12%, there has been a swing from the Lib Dems to the Conservatives of 3% from the last election. On a uniform swing, that would give the Tories just eight of these target seats. The Lib Dems may have lost half their support, but the Conservatives have also lost some vote share. We shall need to work out what will happen in Lib Dem-held constituencies in particular: what will happen to the Lib Dem vote? And what will happen to the Conservative vote? That is going to take further analysis in future posts.  The destiny of these seats at the next election is not obvious on first inspection.  Of the Lib Dem seats, I like the look of the 11/10 on the Conservatives in St Ives and North Cornwall best.  The odds in Berwickshire, Roxburgh & Selkirk and in North Devon both look decidedly mean.

What about those more difficult Labour seats?  Are there any seats where the Conservatives are worth backing?  Well clearly on current polling the Conservatives cannot hope to take many of these.  If you believe that the pendulum will swing in the Conservatives' favour, you need next to consider where the Conservatives will gain support and where Labour will lose it.  By definition, the current state of play will not prevail.  So Walsall South at 8/1 looks like it might be value, requiring only a 2.2% swing and with a relatively small Lib Dem third party vote.  It certainly looks more appealing than the 8/1 you'd get on the Conservatives defeating the Lib Dems in Westmorland & Lonsdale.  The 16/1 in Scunthorpe is worth considering if you think that UKIP will make inroads into the traditional working class Labour support (but note that it was Elliot Morley's seat, which may have affected Labour's performance in that seat).  The 10/1 in Great Grimsby looks like it might be value as well, for the same reason (though note that there is a big Lib Dem contingent here).  And the 5/1 in Wirral South is relatively long for the minuscule majority Labour have in the seat.

 

It has to be recognised, however, that all of these seats are going to be a challenge for the Conservatives without major movements in the polls.  Any bets placed need to be understood to be outside bets.