The intriguing possibility of Labour winning the next General Election by a very small majority but with the Tories holding most seats in England is raised this morning by a further softening of the Labour position on the spread betting markets. The latest spreads are:-

LAB 327-337 seats
CON 243-253
LDs 52-57
Total seats in next House of Commons 646

Taking the mid-points in the spread a Labour total of 332 would give Tony Blair/Gordon Brown just nine more than is required for an overall Common majority. The Tory mid-point split of 248 would comfortably take them over the 245/245 target to have more MPs representing English seats than Labour. They would still, however, be 17 seats short of the 265 target that would give them an overall majority of English seats.

With the possible exception of the fuel crisis in September 2000 this is, we believe, the highest ever point the Tories have been on the spread markets.

Given, as we have shown repeatedly on politicalbetting.com, that it requires a political earthquake for the Tories to secure a Commons majority the objective of winning England might be one that Michael Howard would be happy to accept. It would also create an extraordinary situation whenever Scottish Labour MPs sought to vote on England-only matters.

The spread markets are worth following because political gamblers are not just people who have opinions. These are individuals who are prepared to back their judgements with cash so the spread price is based on decisions of hundreds of punters who are digging deep into their pockets to support their position.

In spread-betting a punter wanting to back the Tories would “buy” at the top of the spread – 253 seats. The winnings would be the stake multiplied by the number of seats the Tories actually win above 253. So if they got 275 seats and the stake was £50 the winnings would be 22 times £50 = £1100. But if the Tories only managed 230 seats the punter would lose 23 times 50 = £1150. The same works in reverse with a sell bet. If you do not believe that the Tories will achieve the total at the bottom of the spread, 243, you sell and if they ended up with 230 you would win 13 times £50 = £650.

The spreads are set by the spread-betting companies in response to what real punters are doing. So the more money going onto a position then the chances are that the spread-price will move accordingly. The attraction of spread betting is that the more you are right the more you win.

There are huge down-side risks and this form of betting is only for the very bold.