Could the Conservatives win an overall majority in the 2015 General Election next year? (PART 1)

Could this happen in a general election?

Labour have been having a torrid time recently. Last week, the leader of the Scottish Labour party resigned, accusing her Westminster colleagues of treating Scotland like a “branch office”. Yesterday, two Scottish Westminster polls were released. IPSOS-Mori had the SNP at 52% of the vote, suggesting Labour could be reduced from 41 to 4 MPs in Scotland next year.

In addition, there have been twelve opinion polls this month showing the Conservatives either tied with, or ahead of, Labour (hat-tip to ‘Rod Crosby’). The Conservatives also retook the lead from Labour in the daily YouGov Sun poll last night. There is increasing evidence of Labour losing support to the Greens in the “trendier” urban areas, to the SNP in Scotland, and to UKIP in some of its core northern bastions. And Ed Miliband’s leadership ratings are truly dire.

For an official opposition looking to retake power as a majority government in just over 6 months time this is not good news. The market’s reaction to all this (most notably on Betfair) has been for the price on ‘No Overall Majority’ to shorten sharply. They assess (correctly) that Labour’s chances of achieving an overall majority are starting to look very poor. If Labour dropped just 12 seats (net) in Scotland to the SNP, they would require 80+ gains in England & Wales to obtain an overall majority.  That would be the best performance by Labour from opposition in the last 80 years, apart from the two landslide victories they achieved 1945 and 1997.

However, simultaneously, the Conservative majority price has lengthened. It currently stands at over 5/1 on Betfair. This is partly understandable: Labour woe does not equal Conservative success. In particular, whilst a thumping SNP victory in Scotland would heavily damage Labour, it would not directly benefit the Conservatives. There’s a long way to go until May 2015. Plenty of things could trip the Conservatives up along the way too, not least of all Cameron’s nemesis: UKIP.

Cameron has not had a good time recently. He’s already lost one by-election in Clacton, and is on course to lose another in Rochester and Strood. He’s facing a demand for payment on a large bill from the EU, has a tricky vote to navigate in the House of Commons on the European Arrest Warrant, and, if he fails to satisfy his party’s restless backbenchers, may even face a leadership challenge.

But what if Cameron navigates all that successfully into the new year? What if “swingback” to the Conservatives, as the incumbent government, continues? What if Labour’s poll ratings continue to erode? What if the Tories manage to establish a clear poll lead by May that enables them to win an overall majority?

It’s a tall order, but this isn’t complete fantasy. Lord Ashcroft’s Polls show some interesting underlying trends in opinion. His national poll this week showed that swing voters trusted the Tories to manage the economy in the best interests of Britain by 50% to 19%. UKIP voters did so by 56% to 17%.  In addition, his post-conference season poll on 12th October showed that by 63% to 37% all voters are either satisfied with the job David Cameron is doing overall as Prime Minister, or were not satisfied, but would still prefer to have him as Prime Minister over Ed Miliband.

This could all start to tell. It suggests that if the Conservatives can make the election about the economy and leadership, and a clear choice between themselves and Labour, they stand a chance of winning it. The latest UK general election forecast from Stephen Fisher assesses the chance of a Tory majority at 27%; significantly higher than the chances of Labour majority at 19%. I think the betting markets have the odds of a Labour and Conservative majority the wrong way round.

The question for punters – interested in possibly capitalising on this – is which is better value: betting on the overall election result, or in the various constituency markets?

One area I feel’s been overlooked (so far) is the prospect of the Conservatives making seat gains directly from Labour. The focus has tended to be upon the more obvious gains that are there to be made from the moribund Liberal Democrats. However, unless the Liberal Democrats almost entirely collapse in the Conservatives favour, and they suffer hardly any losses to any other party, the Conservatives will almost certainly have to win some seats from Labour in order to achieve a small stable majority.

But will they win any?

The short answer: very possibly. In my next post, I will explore this in more detail.

Is it worth betting on an EU referendum during the lifetime of the next government?

Welcome to my new blog. This first post is a bit of an experiment.

The Conservatives, under David Cameron’s leadership, have pledged to hold an EU in/out referendum during 2017 if they win the next general election. Indeed, Cameron has pledged, “I will not become prime minster unless I can guarantee that we can hold that referendum.”

That leaves him little room for manoeuvre. Even if the Conservatives fail to win an overall majority next year, if David Cameron wants to stay PM in any guise he will be under immense pressure to deliver this. Anything less, and he simply won’t survive as Conservative leader.

Today, another interesting development took place. The Conservatives second attempt to enshrine an EU referendum into law by the end of 2017 has cleared its first parliamentary hurdle.

Although there isn’t much time left, only around 6 months, this private member’s bill could become law before the General Election. If it does, it will create a legally-binding obligation to hold a referendum by that date.

The House of Lords did scupper similar legislation earlier this year, when it ran out of time amid Labour and Liberal Democrat opposition. However, crucially, because this is now a new parliamentary session, and the Lords can only delay bills by one year, it is possible that if it fails again it could be rammed through into law by use of the Parliament Act. The fact that several Labour MPs spoke out against it today, but did not vote against it, is perhaps indicative that this is a battle which they’re choosing not to fight this close to a general election.

All of that makes this bet at William Hill that an ‘EU in-out referendum takes place during the lifetime of the next government’ look very interesting. The odds are 11/4 for YES and 1/4 NO. Very roughly: a 25% and 75% chance, respectively.

If the Conservatives are in government after the General Election next year and (Betfair currently makes it ~40% chance they’ll be ahead on seats) then by hook or by crook Cameron will need to make this happen, or lose his job. That could be through a second coalition with the Liberal Democrats, even earlier in 2015 through a confidence and supply deal with UKIP, or possibly via a Conservative minority government. Cameron could simply dare the other opposition parties to vote it down and face the electoral consequences. They might easily prefer to abstain instead, allowing it to pass.

Of course, if it becomes law, the referendum *must* happen by the end of 2017 regardless. There’s also an argument that the narrative on the UK holding an EU referendum has now built up such a head of steam, with public expectations to match, that even a Labour government – particularly if it’s in a minority itself – might perhaps feel obliged to offer one.

Now, we have to be slightly careful here. The “next government” and the “next parliament” aren’t necessarily the same thing. The Fixed-Term Parliament Act 2011 means the next parliament will run for the full five years from 2015-2020 unless the Commons votes with a 2/3rd majority to dissolve it early, or the government falls in a no confidence vote. However, if a ‘loose’ Conservative minority government is formed and, say, falls after 6 months it is possible the government could switch to another (for instance, a Labour minority, or Labour-Liberal Democrat coalition) within the same parliament, *and* without an election, before this referendum has been held. Hills might then either declare this bet null and void, or call it as a “no” – and it loses – even if one subsequently takes place.

However, I think that’s a fairly small chance. This is still a good bet. This referendum is coming; it’s only a question of time. The odds look like value to me.

I’m on YES with £25. I’m feeling pretty confident I’ll collect.