“..Is 0.38/1 a good investment for part of my lump sum?”

Last week I was emailed by JH who is considering whether to bet £10,000 from his pension on Gordon Brown. He’s just retired with an index linked pension based on his final salary and has been looking at ways of getting a good return from his tax free lump sum.

JH has been following PB.C for some time and he had come to the conclusion that sometimes, such as with Cameron last November, reasonable betting prices could be had on near certainties in political markets.

Given the now “near certainty” that Brown’s succession to the Labour was being regarded surely putting a large sum on at the present 0.38/1 was a great way of turning £10,000 in £13,800. What did I think? Was this a good bet?

Of course I started by warning that you have to go into any bet on the assumption that you might lose. Only he could know what the impact of the loss of £10,000 would be on his ongoing financial prospects and I could not advise.

My email went on “…The big problem with this bet is timing. Neither you, nor other punters, nor even Brown himself know for certain when Blair will go. The Chancellor has shown a marked reluctance to push the issue and the latest YouGov Labour members’ poll underlines that the party has not got the stomach for a forced departure.

The threats to Brown come from both Blair and the Tories. Will the Prime Minister use what influence over events that he has to thwart Gordon? Blair has it in his power to make it easy or hard. And the longer this issue is delayed the greater the chance of something emerging that could undermine the Chancellor’s reputation – the latest Freedom of Information Act move on Brown’s 1997 “pensions raid” is the latest in an ongoing Tory onslaught.

There’s also the possibility that you have to take into account that something untoward could happen to Brown himself – a health issue for instance.

Looking forward the whole UK political scene will change dramatically once Tony Blair makes his historic announcement. People will scrutinise Brown in a way that they have not done until now. Thus his years of successfully deflecting the tax credit issue might not last when he’s being judged as a Prime minister set to take over.

Then there’s the media to take into consideration. Journalists hate foregone conclusions and there’ll be strong support for a contest if only because it makes a better story. Someone emerging as a possible Brown opponent would get favourable treatment in the same way that Cameron experienced when the foregone conclusion of a David Davis leadership started to look doubtful at last year’s Tory conference.

That the Chancellor is Scottish is simmering as an issue and, frankly, he has been less than convincing in his promotion of Britishness and his position on England’s World Cup bid.

Assuming that you are ready to take the risk there’s the betting process to take into account. The 0.38/1 is only available on the Betfair betting exchange and it’s going to be hard placing much of the £10,000 at this level. Once you start backing the price will surely tighten and you could see it move to 0.30-0.33/1 in a very short time.

Adding it all up a return of £3,800 is not enough given you would be risking £10,000. Try backing the Tories in Bromley instead. That looks like a certainty and you won’t have long to wait for your profits.”

Latest Labour leader prices are here. For the Bromley betting click here.

Mike Smithson