Are the spread gamblers reading it wrongly?

Either spread gamblers or the spread bookmakers seem to have concluded that Super Thursday was better for Labour than the Tories or Lib Dems and prices have moved Labour’s way.

LAB 328-338 (+5)
CON 240-250 (-3)
LIB 53-58 (-2)

Although our General Election CALL remains with Labour this was not reinforced by Thursday’s elections and we think that the spread markets are reacting wrongly. The Lib Dem spread seems to offer good value as a BUY – this is the first time we have made a call on General Election spread betting. The main General Election market is stable. So what is there to learn, if anything, from the local, London and Euro elections?

Voters cast their ballots differently in domestic and European elections. If the results from Thursday had been announced the other way round, the locals coming after the Euros, commentators would now be dismissing the UKIP element and talking, instead of the good Lib Dem and Tory performances. General Elections are usually decided on UK rather than international issues so the local results are probably more significant. UKIP has got a boost and will do better than the 1.5% it got in 2001 – but today’s ICM poll has it at just 4%.

We can have reasonable confidence in YouGov’s ability to measure the Tory-Labour split. The Euro Election against was the first time that we have been able to test the new and controversial internet pollster,YouGov, in a fully national election since it took over the regular monthly General Election polls for the Daily Telegraph. YouGov failed badly with its huge prediction for UKIP and under-shot with the Lib Dems. In terms of measuring the difference between Labour and the Conservatives it came out pretty well. It underestimated the Tories by 0.7% and over-estimated Labour by 1.4% – a useful fact to bear in mind when assessing today’s ICM poll showing Labour at 34 and the Tories at 31. The last YouGov General Election poll, taken on Thursday, had the Tories 4% ahead.

Tory supporters will vote tactically to get rid of Labour. At the very minimum we would expect to see some “unwinding” of the anti-Tory tactical voting that lost 24-35 Tory seats in 1997 and which stayed lost four years later. In many of the big cities, traditional Labour heartland, Tories switched to Lib Dem in the locals to get Labour out. This gives the party a good platform to campaign for tactical anti-Labour votes at the General Election. The coming Leicester South by-election will be a good test of this.

All-postal voting can give Labour an extra 5%. In a low-turnout election there was a measured boost for Labour. How much of this would there be in a high-turnout General Election? There probably would be an impact but on a much lower scale. The fact the postal voting did benefit Labour so much means there’s going to be a huge political debate with the Tories and LDs highlighting where it went wrong.

POLITICALBETTING.COM’s PREDICTION – SPOT ON. Because there were no markets on the Euro Elections we did not make a forecast here. However on another site politicalbetting.com’s, Mike Smithson, published the following prediction last Tuesday – “I think that UKIP will get 17%. The Tories will get 3-4% more than Labour and the Lib Dems will get 14-15%”. This proved to be almost precisely right in every respect – though it’s no consolation for those who followed the Mayor market call!