Not a good weekend for the Tory leader

A double blow for Michael Howard this weekend looks set to put even greater pressure on the Conservative price on the General Election spread betting markets.

Firstly came the news that the former Higher Education minister, Robert Jackson, has defected to the Labour party. Secondly a new Populus poll in the News of the World shows that the Tories are falling back in the key marginal seats that they need to win if they are to make any impression on Labour’s mammoth majority.

When a similar poll was carried out in June Populus was predicting that the Tories would take 45 Labour seats reducing the majority to 107. Now Labour are set for a majority of 160.

We expect the markets to read a lot into these two events and the spread price on how many seats each party will get at the coming election will move even more sharply to Labour and against the Tories – a trend that we predicted a month ago.

But punters should be a bit cautious. Populus changed their past vote methodology in December which had the effect then of adding 3% to the Labour margin over the Tories. It is very hard drawing too many conclusions from a poll now compared with one in June which, we assume, was carried out on a different basis. It would be good if the head of Populus, Andrew Cooper, could comment on this in our forums because usually he is more than willing to share information on such issues. [10 am UPDATE. Andrew has now posted below that the two polls can be compared.]

The Tory statement on the Jackson defection is a classic put-down. “He believes students should pay tuition fees, that Tony Blair should not be criticised over his handling of the Iraq war and that more powers should be given to Europe”. With these views the mystery is why this has not happened before?

At some stage the spread buy price on the Tories is going to drop to a point where it might become attractive particularly because in spite of everything the gap between the two main parties is much closer than it was four years ago.

We do not think that we are at that point yet and we will not be surprised to see it decline by 10-15 seats. Currently IG Index have it at 190-197 seats and Spreadfair at 194-197 seats. On a buy bet IG is the better value here because you do not have to pay commission.

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Mike Smithson