I'd rather be happy than right: 2015 personal election review

Well that didn't go as expected.  With the luminous exception of Scotland, I was completely wrongfooted by how the election result turned out.  I could argue that so was everyone else but that would be a bit of a cop out.  It's my turn to eat some humble pie.

So what did I get right and what did I royally mess up?  The best place to start must be my end of year predictions:

http://newstonoone.blogspot.co.uk/2014/12/2015-may-and-everything-after.html

These were, in order:

1. There would be a hung Parliament
2. It will be neck and neck between the Lib Dems and the SNP which would be the third party.
3. UKIP would get a good poll rating and few seats to show for it.
4. The Greens would take precisely one seat: Brighton Pavilion.
5. The debates would take place, basically in the format put forward by David Cameron.
6. The election campaign wouldn't change very much.
7. There would be a Labour minority government.
8. All of the leaders (except Nicola Sturgeon) would be in peril of losing their jobs.

Not good, are they?  I was right about UKIP and the Greens, half right about the debates (the format changed considerably) and right about the pressure on the leaders apart from David Cameron - though Nigel Farage's bouncing resignation was an innovation in British politics that I hadn't expected.  But for the rest, I was hopelessly wrong. 

There's no point sugaring the pill, this was a terrible set of predictions.  What went wrong?

Despite being very aware that polling was an unreliable friend and likely to be particularly unreliable this time with the rise of UKIP and the SNP and the crash of the Lib Dems, I still relied heavily on the opinion polls.  I think I acted correctly when I put together these predictions - you have to make use of the evidence that you have got in the absence of concrete reasons to doubt that evidence.  At the turn of the year, I had no such concrete reasons.

In fact, my year-end predictions were largely what I expected right up to 10pm on 7 May 2015 (but by that stage I expected the SNP to far outstrip the Lib Dems, though even then not by as much as in fact happened).  The polls had remained static, even though the mood music from both main parties and the campaign itineraries of the two main party leaders suggested something different from the polls.  That failure to revise my expectations was less forgivable.  Ed Miliband would not have been campaigning in North Warwickshire and David Cameron would not have been campaigning in Twickenham and Bath if they didn't believe that the election was far adrift of where the polls suggested.  One of them might have been wrong.  Both of them were most unlikely to be.  I should have taken more notice.

So I wasn't right.  But I am still happy.  Why?  Because my betting produced the returns I was looking for from them.  How did I turn a profit when I had been such a poor prophet?  I need to break this down into asset allocation, stock selection and timing.

As of 10pm on Thursday night, my portfolio of fixed price bets was comprised in the following categories:

1. Scottish constituency bets, almost all on the SNP
2. English constituency bets, the great majority on the Conservatives, but not exclusively if I saw bets that I thought offered disproportionate value on other parties
3. Hung parliament (I'll come back to this)
4. Labour most seats
5. Labour minority government
6. Laying David Cameron as Prime Minister after the election and backing Ed Miliband as Prime Minister after the next election
7. Miscellaneous others

I had placed some spread bets, but this time I didn't put huge sums at stake that way.  My focus was elsewhere.

You can see from the bets that I placed that these were partly indirectly hedging.  Relative longshot Conservative constituency bets were inconsistent with bets in categories 4, 5 and 6 in particular.  By selecting constituency bets that I felt were likely to outperform each party's run-of-the-mill seats for the same odds, I hoped to maximise returns.

I did so well on my Scottish constituency bets that everything else pales into insignificance.  They comprised roughly 80% of my winnings.  This was a triumph of asset allocation - all those hours I spent poring over the likeliest SNP wins proved entirely superfluous in the end (indeed, at an early stage I had managed to back the SNP to win Edinburgh South, the one seat that they did not take, though having obtained odds of 25/1 on that possibility I can scarcely be too upset).

But I did OK elsewhere also.  On Thursday morning, I thought that most of my English constituency bets on the Conservatives were heading for the virtual ashtray.  But on Friday morning, they largely came up trumps.  My strategy of seeking out value on both sides of the fence left me ahead.  Here, stock selection was more important.  And I did OK, particularly as regards the battle between Labour and the Conservatives.  

Labour took ten seats from the Conservatives.  Of these, I had placed losing bets on the Conservatives holding City of Chester, Hove and Ilford North.  But conversely I did bet on Labour taking Brentford & Isleworth and Ealing Central & Acton.  I avoided betting on the other five either way.  Meanwhile, I successfully backed the Conservatives (at fairly long odds) to keep many of their other most marginal seats, and while I'd backed Labour to take some other seats, I am not embarrassed by my choices there either.  Taken as a whole, I think I did a pretty fair job of identifying which Conservative seats might underperform and where Labour might outperform against the Conservatives.

In other battlefields, the story was much closer to neutral overall (I did conspicuously badly with UKIP).  But I did best where I'd bet most.  

I made one other critical decision early on Friday morning which was worth a four figure sum to me.  After seeing the exit poll, I was aware that it was in doubt whether the Conservatives would merely be the largest party or whether they might get an overall majority.  Following the results in Nuneaton and Swindon North, where the Conservatives had outperformed the exit poll in each case, I reversed my previous position on no overall majority and backed the Conservatives getting an overall majority at fairly long odds.  Timing was everything on this. 

If this all sounds too smug, please return to the top and reread my serving of humble pie.  I will.  Overall, I made a complete hash of my predictions.  Fortunately, I got away with it.  This time.

When April turns to May: what the seat markets imply for the election result

It's time to put the pieces together.  Over the last few days, I've been looking at the constituency markets on a party by party basis, sorting the seats by the implied probability that the bookies have given to each party in turn and looking at what that means for them both in general terms and in specific seats.  I attach links to each of them below (some of the prices are already slightly out of date, particularly following the gyrations in the prices in the Scottish constituencies over the weekend):

Labour

http://newstonoone.blogspot.co.uk/2015/04/the-labour-battleground-in-april-2015.html

Conservatives 

http://newstonoone.blogspot.co.uk/2015/04/the-conservative-battleground-in-april.html

Lib Dem 

http://newstonoone.blogspot.co.uk/2015/04/the-lib-dem-battleground-in-april-2015.html

 SNP 

http://newstonoone.blogspot.co.uk/2015/04/the-snp-battleground-in-april-2015.html

UKIP 
 

http://newstonoone.blogspot.co.uk/2015/04/the-ukip-battleground-in-april-2015.html
 

Greens, Plaid Cymru, Respect, NHA and Independents

http://newstonoone.blogspot.co.uk/2015/04/other-parties-and-independents.html
 

And new for April, I've prepared tables for the Northern Ireland seats:

https://drive.google.com/file/d/0Bygi8eZw-4q1SXBsTVFWVVRJRmM/view?usp=sharing

I don't propose to give any commentary on the Northern Irish seats, partly because I have no great insight and partly because there aren't that many interesting seats.  Some of the DUP and Sinn Fein 1/100 bets are as sound 1/100 bets as you will find anywhere, mind.
 

Now it's time to put together the overall picture as it stands.

Projected seat tallies

What are the implied seat counts?  Allocating the seats to the favourites (halving them when there are joint favourites) gives the following seat counts:

Conservative: 273
Labour:265 1/2*

SNP: 54

Lib Dems: 30 1/2

DUP 9
Sinn Fein 5
SDLP 3
Plaid Cymru: 3
UKIP: 3
Speaker: 1

Lady Sylvia Hermon: 1
Greens: 1
Respect: 1

*This figure has been adjusted to take account of the intervening seat movements in Scotland since the Labour seat odds table was compiled.

What kind of government would that produce?  Labour plus SNP would be just shy of the magic 326 figure.  Adding in the support of the SDLP, Plaid Cymru, the Greens and Lady Sylvia Hermon and the passive support of Respect would get a Labour-led government control of Parliament.

That would work for UK-wide matters, but the SNP would not be reliable partners for English-only matters.  In those circumstances, Labour would probably need Lib Dem support also.

Nevertheless, the par numbers suggest a rickety Labour minority government.  If it panned out like that, it would be fun.  You can still get that at 7/4 and I've been tipping it since it was 7/1. 

 

What might yet change?

That's all well and good, but we need to think about what are the likely bounds of possibilities.  With less than three weeks to go we can largely confine ourselves to the 1/2 to 2/1 bands.  There will be seats won at longer odds, but we should now expect that to happen relatively rarely.

 

So what's the likely minimum and maximum for any party?  Here are the totals that each party would tally if they took all the seats in which they are priced at 1/2 or shorter (but no more) and the totals that each party would tally if they took all the seats in which they are priced at 2/1 or shorter (but no more):

Labour: 241* - 301*

Conservative: 239 - 305

SNP: 43 - 57
Lib Dems: 17 - 37

DUP: 9

Sinn Fein: 5
Plaid Cymru: 2-5
SDLP 2 - 3
UKIP: 1 - 7
Speaker: 1
Lady Sylvia Hermon: 1
Greens: 1
Respect: 0 - 1
UUP: 0 - 2

*This figure has been adjusted to take account of the intervening seat movements in Scotland since the Labour seat odds table was compiled.

What can we sensibly note?  Well, first, it is now most unlikely that we will see an overall majority.  You can back No Overall Majority at 1/8 on Betfair and that looks like value even at that price to me.  Note that before the latest SNP surge, Labour were priced at 2/1 or less in 322 seats, meaning that their outer bound was within a whisker of the overall majority threshold.  That has receded into the distance.   1/8 on No Overall Majority is some way too long.

 

Secondly, it is going to be very hard for the Conservatives to get to form the next government.  If they don't get an overall majority (or very close), they're going to need the connivance of the Lib Dems.  The Conservatives will need at least 295 seats and that is close to the top end of the range for them.  Laying David Cameron as Prime Minister after the next election looks value right the way to 2/1 at the least.

 

Oh, and the 7/4 on Labour minority government continues to look like very good value, particularly given that the SNP would be an essential component of any majority and there is no prospect of any coalition between those two parties.

But I've plugged all these bets before.  Do I have any new ones?

 

These ranges are surprisingly tight.  You could take the view that the seat prices are too bunched (I have some sympathy with that view) or you could work on the basis that the variations from the norm will cancel each other out.

 

If you take the latter view, you might back 21-30 Lib Dem seats at 5/4 and 31-40 seats at 5/2, both bets with Bet365.  By placing appropriate stakes, you can get effective odds of slightly better than 1/3 that the Lib Dems will get between 21 and 40 seats.  Given the very local appeal of each Lib Dem candidate, it seems unlikely to me in practice that the Lib Dems will get fewer than 21 seats because their chances in different seats are much more loosely correlated than, for example, the major parties. 

 

Similarly, you can back the Conservatives to get 251-275 seats at 7/2 with Ladbrokes and 276-300 seats at 13/8 with William Hill, giving effective odds of slightly worse than 4/6 that the Conservatives will get between 251 and 300 seats - place the bet with William Hill first because it's more likely to be limited.  Conservative chances are much more correlated than the Lib Dem's chances, but this still looks like a good combination bet to me.  I've put some money on both of these combinations.

 

The same combination is available for Labour (251-275 seats at 7/4 with William Hill and 276-300 seats at 2/1 with Ladbrokes) for effective odds of slightly worse than 4/9.  The reward doesn't look quite good enough for me, but it's not far off either.

 

For a quirky bet, Coral offer a UKIP vs Plaid Cymru match-up.  The 7/2 on the tie looks like fair value, given that both are favourites in three seats.  I'm on.

 

The range of possibilities: how the constituency markets look in aggregate in March

In late November I had a look at how the constituency markets were assessing the parties' chances in aggregate - not just by looking at how the favourites stacked up in aggregate but also at how many seats in aggregate were in practice in play:

 

http://newstonoone.blogspot.co.uk/2014/11/conventional-wisdom-on-next-election.html

 

I thought it was about time, on the eve of the campaign, to look at this again.  Here are the aggregates of the best prices favourites on the seat markets:

Conservatives 275
Labour 278
Lib Dems 31
SNP 40
UKIP 3
Plaid Cymru 3
Greens 1
Respect 1
DUP 9
SDLP 3
Sinn Fein 5
Lady Sylvia Hermon 1

We now have Northern Irish seats, so we have a full house.  I have treated the Speaker's seat as being in the Conservative column, though different "most seats" markets treat his seat differently, so check this.

 

Since the end of November, the SNP have risen dramatically in the best-guess seat tally.  Correspondingly, Labour have dropped substantially.   Interestingly, the polls haven't actually changed much since December.  Sentiment has changed.  It seems to be a dawning realisation that the Scottish polls reflect an underlying reality.

 

Otherwise, the aggregate of the favourites has stayed very stable.  That is also interesting, because the constituency markets assume a level of recovery by the Conservatives and the Lib Dems which doesn't so far seem to be happening.

 

As you can see, both main parties are thought to be quite a long way from an overall majority. 

Just as importantly, Labour are thought to be slightly ahead of the Conservatives in the battle for most seats.  Even if you take the view, as I do, that the seat markets still underestimate the SNP's chances in Scotland, the two main parties are neck and neck.  You'd never guess that from the "Most Seats" market, where Labour can be backed on Betfair as of this morning at 2/1.  This price is crazy and backing Labour heavily on the Most Seats market should be an essential part of any portfolio of political bets.
 

How stable is that projected outcome?

As before, I've looked at how strongly fancied the favourite is.  And as before, I've worked on the basis that if there is a second favourite at or below 2/1, this is a true marginal.  I've presented the results in a tabular format, with the parties' range shown below:

https://docs.google.com/document/d/1o_021oOlU0YpvApb62zBI0MGVNXdaH3G3YppG8JYFMM/edit?usp=sharing
 

And again we see a substantial change from late November in both the Labour and the SNP columns.  The Conservative band has edged up slightly, but the Labour band has shifted down roughly 20 seats.  Meanwhile, the SNP band has moved forward by roughly 15 seats.

The consequence is that even at the outer edges of this measure of the parties' safe seats and marginals, neither party will get to an overall majority.  Neither party looks very likely to get to 300 seats - everything within this bound of probability would have to come right for the Conservatives for that to happen for them and most things within this bound of probability would have to come right for Labour for that to happen for them.

For those that are interested, here are the Northern Irish seats presented on this basis:

	DUP	SDLP	Sinn Fein	UUP	Independent
DUP	8	1	0	1	0
SDLP	1	2	0	0	0
Sinn Fein	0	0	4	1	0
Independent	0	0	0	0	1
UUP	1	0	1	0	0
Total	8-10	2-3	4-5	0-2	1

These will not affect the outcome of the main battle, of course.

Taking a broader view of what makes a marginal

Let's push the boundaries further.

As previously, I've also had a look at the position if we use the test of marginality as a seat having a second favourite that is priced at 5/1 or less. This table is complicated by the presence of 13 three way marginals (hence the extra row).

 
https://docs.google.com/document/d/1GVCbP7pn701XM-uOhJH7HL3QMYBFpDjr5RDP2BNTaMQ/edit?usp=sharing

(The independent is Claire Wright in East Devon, who is a localist environmental type, who has apparently been quite fancied at the bookies.)

The ranges of outcomes are now much wider than when I used a 2/1 cut-off for assessing marginals, but these wider ranges barely differ from late November.  The betting public aren't that sure of the SNP's chances. 

This stability of range is itself noteworthy.  These markets aren't shifting very much.  I haven't changed my views on the question of how correlated the results in different constituencies will be.  In my opinion, the answer is different for different parties.  The SNP will see very correlated results, since the election in Scotland is either going to be all about their turf (as seems likely right now) or Labour will have reframed it to some extent on UK-wide terms.  At the other extreme, Labour and the Conservatives are fighting multiple different battles and so the correlation will be much less.  To get a fuller version of my views on this subject, I went into this in much more detail last time, so have a look at the link at the top of the page if you want.

Again, for those that are interested, here are the Northern Irish seats presented on this basis:

https://docs.google.com/document/d/1EVhvEvf3wZDQmJbF55wNavDpAHUMRn0n6Jf5GGyPSwA/edit?usp=sharing

It is a more stable position than the rest of the UK, even at this level of marginality.

Conclusions



If the seat markets are to be believed, there is only a slim chance of either main party achieving an overall majority.  Even on the most generous interpretation of what makes a marginal, each main party is going to have to get close to taking everything thought to be in play to get there. 

Incidentally, it would be nice to be able to produce a neat graph which shows the exact implied probabilities of a hung Parliament, but the degree to which the results in individual constituencies will be correlated is uncertain, so it will be a matter of guesswork rather than science.

Are the seat markets to be believed?  Good question.  Two considerations push me in opposite directions. 

On the one hand, the two main parties have been regularly polling in the low 30s in the national polls.  On those national vote shares the winners in many seats will do so on relatively low local vote shares, meaning that the winners may be considerably less predictable at an individual level than the constituency markets suggest.  (The corollary to that is that some of the odds against shots may well offer good value.)  Set against that, the unpredictability is quite likely to cancel out to a considerable extent at an aggregate level.

So on balance I probably do believe the overall story of the seat markets.  That leads me to three conclusions:

1) Don't bet against a hung Parliament unless you get long odds.
2) Labour most seats is a terrific value bet at 2/1.
3) Since the Conservatives look unlikely to get above 300 seats (I'd guess at least 3/1), the next Government is very likely to be a Labour-led government.  Lay David Cameron as Prime Minister after the next election at anything close to, or even not very close to, current prices.  He's odds on at present to keep his job.  This is a crazy price.  Enjoy.

 

 

 

 

 

 

 

 

Party games: constructing the next government

Everyone has their own pet theories about what the next government will look like.  I've already had one look at this in early December:

http://newstonoone.blogspot.co.uk/2014/12/the-next-government-picking-through.html
 

I am still following the same general approach, but the numbers need quite a bit of updating, which in turn changes the dynamics. We've had a few more statements of intent from the various political parties, which need decoding.  So my thinking has moved on a bit.

A game of consequences

In my previous post on the subject, I looked at the various parties' positions.  Not much has changed here and the underlying dynamics remain the same. 

Labour yesterday explicitly ruled out a coalition with the SNP (though not a supply and confidence arrangement).  UKIP has become firmer about not entering a coalition with the Conservatives:

http://www.telegraph.co.uk/news/politics/nigel-farage/11467020/This-is-my-deal-Mr-Cameron-an-immediate-EU-referendum-where-my-German-wife-is-banned-from-voting.html

"First, would UKIP wish to form a formal coalition with the Tories? The answer is no. We are radicals; we want real change to help Britain get back self-governance and self-confidence. There are many other areas where we can make a contribution. But I have no desire to swap the short-term privilege of a ministerial car for everything that we have fought for. I would look to do a deal where we would back key votes for them – such as the Budget – but in return for very specific criteria on an EU referendum."

This logic would seem to apply equally to deals with Labour, though Nigel Farage avoided commenting on this.

What does that leave us with?

When you eliminate the impossible, whatever remains, however improbable, must be the truth.  Donning my deerstalker (though without the aid of cocaine), I can identify the following possible outcomes:

1) Labour majority government
2) Conservative majority government
3) Labour-Lib Dem coalition - not necessarily a majority coalition
4) Conservative-Lib Dem coalition - not necessarily a majority coalition
5) Labour minority government (with or without explicit confidence and supply from other parties)
6) Conservative minority government (with or without explicit confidence and supply from other parties)
7) Grand coalition

That, or we're being lied to by one or more of the ensemble.  But I'm a trusting soul and I put my trust in them all.  If you back all of these options at best prices in appropriate proportions, you can get a return in two months of 10%. 

There are three risks in this.  First, one or more politicians may indeed eat their words, or may be replaced by others with different approaches.  Secondly, you may have arguments with bookies about some of these bets - do the coalition options include minority coalitions?  They should, but it's worth checking in advance.  Thirdly, I have treated as "impossible" coalitions that involve parties such as the DUP, the Greens and Plaid Cymru.  You could find your bets losing on this basis (though that really would be bad luck).

So on balance, I don't particularly recommend backing all of the above possibilities indiscriminately, but choosing a bit more carefully.  So let's go further and look at how the numbers are currently adding up.

The current par result

Since early December, the Conservatives have strengthened a bit in the markets, Labour has weakened a bit more and the SNP have strengthened a lot.

This morning, Sporting Index had the following midpoint prices:

Conservative Seats 284
Labour Seats 269

SNP Seats 42

Liberal Democrats Seats 26

UKIP Seats 8

Green Party Seats 1.5

Plaid Cymru Seats 3.3

Compiling the current favourites in the individual constituency markets would not get you to a very different point (though it should be noted that this totals nearly three more than the 631 seats in Parliament for constituencies outside northern Ireland).

The models based on the polls are coming in thick and fast, and in general they are broadly in line with the markets, though the SNP are generally forecast by pundits to do better than the markets currently envisage.  As of 13 March, May2015 predicted the following result:

Polling Observatory, unusually, forecast that Labour will get most seats:

http://may2015.com/featured/election-2015-academics-predict-labour-will-win-20-more-seats-than-tories-and-form-next-government/

Their forecast yesterday was:

Labour — 285 (260-313)
Tories — 265 (235-293)
SNP — 49 (34-56)
Lib Dem — 24 (17-33)
Ukip — 3 (1-5)
Others — 6 (4-9)

The May2015 forecast is more in line with the predictions of most other forecasters at present.  Mind you, Polling Observatory may be right - just because they're out of line with the consensus doesn't mean they're wrong.

What would these figures mean?

For the moment, I'll work off the May2015 numbers.  These, in common with most of the pundits' projections, show that not only should we expect a hung Parliament but the only combinations of two parties to command a majority in Parliament are (1) Conservatives plus SNP and (2) Conservatives plus Labour.  The SNP have explicitly and repeatedly ruled out the first of these, as noted above.  The second also looks like a remote prospect, the entreaties of the likes of Lord Baker notwithstanding: neither party looks anywhere near ready for the idea just yet.

So if we get the par result we look set for a government that is going to be dependent on the support, passive or otherwise, of three or more parties.  That sounds like fun. 

In fact on these numbers, the only arrangements of parties that come close to stacking up given the politics involved both require Labour and the SNP to work together, and then either patch up a ragtag army of Plaid Cymru, Respect, Greens and friendly (or bribed) northern Irish politicians or work with the Lib Dems. 

Will the SNP vote on English-only matters? This is important.  If the SNP are going to abstain on English matters, the practical level of an overall majority reduces to 295, but 55 potentially helpful votes also disappear.  Even if Labour can get Plaid Cymru, the Greens, Respect, the SDLP, Lady Sylvia Hermon and the DUP onside, the government still would not have a majority on the May2015 numbers on English-only votes.  This remains true even if the SNP take 20 fewer seats from Labour, because the practical level of an overall majority increases at half the rate that Labour rises in the seat count.  The Conservatives and the Lib Dems would have a blocking majority in England.  

Labour need something like 290 seats as a minimum to be able to disregard the Lib Dems if the SNP are abstaining on English-only matters (more, if they want to avoid being blackmailed by the DUP).  So if the SNP aren't going to help on English votes, Labour would need to deal with the Lib Dems.

So that means that there remain two critical questions.  First, would the SNP help on English votes?  And secondly, if they wouldn't, what would the Lib Dems do?

The SNP strategy

The SNP's long term aim is no big secret: it wants independence for Scotland.  Nicola Sturgeon has named three preconditions for Labour to get its support: no renewal of Trident; more powers for Scotland; and an end to austerity.  The first and last of these are practically unacceptable to Labour, as she well knows.  So what is she doing?

Given that the SNP has just suffered a clear referendum defeat, it cannot make that a precondition.  But it can use its clout in a hung Parliament to advance that cause.  

Nicola Sturgeon has already indicated that the SNP might vote on English matters where they can claim a Scottish interest:

http://www.channel4.com/news/nicola-sturgeon-nhs-election-devolution-referendum

Her pretext:

"The current Westminster agenda of austerity, privatisation and patient charging in the NHS in England threatens to harm Scotland's budget, on which our NHS depends.

"Therefore, SNP MPs elected in May are prepared to vote for a bill which would restore the national health service in England to the accountable public service it was always meant to be."

This is a fairly screeching handbrake turn from the SNP's previous stance, but makes complete sense from a strategic view.  It winds up the English and maximises the destabilisation of the UK-wide government.  Note, the SNP are not committed to voting on all English-only laws.  But they reserve the right.  Nicola Sturgeon is setting up the opportunity to make the SNP as unpredictable as possible and to destabilise the union as much as possible.  

 

That means that if Labour is to be able to govern reliably on English-only matters, it will need Lib Dem assistance.  Will it get it?

 

The Lib Dems' next steps

The good news for Labour is that the Lib Dems look as though they are likely to be moving leftwards after May, if I am right in my previous deductions:

http://newstonoone.blogspot.co.uk/2015/02/blessed-are-kingmakers-who-will-lib.html

But the Lib Dems seem to be getting steadily wobblier about the idea of being in coalition  with anyone at all.  Vince Cable has pretty much ruled out the possibility of the Lib Dems playing ball with either the SNP or UKIP:

http://www.theguardian.com/politics/2015/mar/13/vince-cable-lib-dem-snp-deal-after-election-inconceivable

"He said: “I think it’s inconceivable that we would be getting into tie-ups with the SNP and I would be very surprised if Labour did that but certainly not the Tories.”

The business secretary likened a deal with the SNP to working with the UK Independence party. He said: “The same is true of the attitude towards Ukip; they want to take Britain out of the EU which is just as fundamental a constitutional change as – well, almost as fundamental as – membership of the UK, so we take a comparable approach to that.” "

And the rank and file are potentially unreliable even to their own leadership:

http://www.theguardian.com/politics/2015/mar/15/liberal-democrat-leaders-asked-about-coalition-without-party-approval

"Despite the Liberal Democrat campaign focusing on the idea that the party as a moderating force in coalition with either Labour or the Conservative party, sources in the party say they are increasingly worried that a deal with either of the main parties would not achieve the two-thirds of support needed by the membership.

While there is a lot of anger about the coalition with the Conservative party, “Labour hates us and we hate Labour”, said one source.

“[A coalition with either of the main parties] might get through the parliamentary party and the federal executive might have their arms twisted to support it, but the party as a whole would probably reject it.” "

But we don't need to get into the Lib Dems' hive mind to work out their preferences.  Ultimately, if the Lib Dems are reduced to anything like the 24 seats that May2015 predicts, they will not have enough bodies to form a credible coalition partner.  Whether they offer confidence and supply or, more likely, simply deal with Labour on a case-by-case basis, they will probably not form part of the government.  They don't look like getting the 35+ MPs they would need to start demanding seats at the table.  They will secure what terms they can from Labour to ensure that the nation has a viable government, then find a corner to lick their wounds. 

Interestingly, all this logic is still broadly applicable if the Polling Observatory prediction comes true rather than the May2015 prediction: Labour would still need the SNP to commit to vote on English-only laws and it is not in the SNP's interests to be a reliable partner.  So Labour will need Lib Dem support, which will probably be given in some tenuous form.

The sum total of all this is that anything reasonably close to what is currently widely seen as the par result will probably result in a Labour minority government.

When do the dynamics change?

Given what the various parties have said and my reading of what's going on, I expect a different dynamic to the ultimate form of government only if:

1) Labour is greater than 290; or
2) Conservatives are greater than 295.

Other possibilities also open up if the Lib Dems get 35 seats or more, UKIP get 20 seats or more or if the SNP fall far short at the last minute.  But all of these outcomes now look unlikely, so I'm not factoring them into my thinking.  

The first case is not too complicated.  If Labour can form a government without needing the unreliable SNP as partners for the difficult English-only votes, they will.  They can expect SNP support when it's not needed too.  Labour will rely on the Lib Dems or the Parliamentary shrapnel to get their majority in these cases.  That support may be tenuous, but it will be sufficient to get them into office in a minority government - unless they surpass all expectations and get an overall majority.  But that looks like a very outside chance right now.

When do the Conservatives get the chance to stay in power?  Given that the SNP is avowedly left-wing and anti-austerity and the Lib Dems would describe themselves as progressive, the Conservatives need to secure a seat count for themselves that makes an effective majority impractical without them.  For that they need a seat count that either is sufficient with the Lib Dems to reach an overall majority or to have a seat count at or above the effective level for passing English-only laws if the SNP abstains.  In those circumstances, particularly if Labour is unable to put together a coalition or formal supply-and-confidence arrangement, the Conservatives would fancy their chances of staying in power.  For the reasons given in the previous posts linked to above, I assess that level at 295 seats.

If they get the chance, the Conservatives will form a minority government unless the Lib Dems scramble to 35 or more seats or unless the Conservatives get their overall majority.  Neither outcome looks to be in prospect.

How likely are these other possibilities?

This is the critical question. Most importantly, how likely is it that the Conservatives will get to 295 seats?

I have not repeated my analysis from late last year as to the implications from the betting market on this:

http://newstonoone.blogspot.co.uk/2014/11/conventional-wisdom-on-next-election.html

(I'm hoping that I'll get time to do a full round-up of all the seat markets on the eve of the election.)

My lick-of-the-finger guess is that the Conservatives would have roughly a 1 in 3 chance of getting to 295 seats at present, bearing in mind current polling.  Feel free to disagree with me though.

On that basis, I make the current probabilities something like the following:

Labour minority: evens
Conservative minority: 3/1
Anything else: 3/1

So I see some value in backing a Conservative minority government, but loads and loads of value in backing a Labour minority government.  If anything, I feel that I'm being cautious about my assessment of the chance of a Labour minority government.  You can still back this at 7/2 with SkyBet and 3/1 is widely available.  I've backed this heavily and so far I've ignored the option of backing Conservative minority government (I backed it at 7/1 in November and December and it has improved as a bet since then).  If you are more bullish than me about the Conservatives' prospects, you will want to cover Conservative minority government too.  But for myself, I wouldn't bother with anything else.

The other bet that still looks good is laying David Cameron on Betfair as Prime Minister after the general election.  To me this looks firmly odds against now, and by quite some way.