What’s behind the Lib Dem price rally?

If you feed the latest figures from the main pollsters that have reported since the Tory conference into the Anthony Wells commons seat calculator the highest number that you get for the Lib Dems is 21 MPs from the Populus survey three weeks ago. The latest ICM poll makes it 18 seats with both YouGov and Ipsos-Mori showing a bare 11 seat total.

Martin Baxter’s Electoral Calculus site is even worse with his poll of polls producing precisely zero Lib Dem MPs after the next election on his seat calculator.

Yet just take a look at the overnight spreads from Sporting Index and Spreadfair reproduced above. The current LD buy levels are equal and in Spreadfair’s case, higher than what was available after the party’s conference in September when ICM was reporting a 19% share and Populus 17%.

This is not just affecting the Lib Dem spreads. The number of Tory seats being projected by the markets is now much lower than the seat predictors are suggesting.

Now the standard Lib Dem answer, which I buy into, is that the party incumbents have a very good record of holding on in spite of what national conditions might be like. Highly selective targeting of resources and activists tends to lead them to retaining seats that the national trends would suggest that they should lose. Also there is the tactical voting element. If Labour supporters want to impede the Tory resurgence in LD>CON marginals then there’s a strong incentive to switch.

It might be, also, that we’ll see Tory tactical voters in LD>LAB marginals like Manchester Withington.

But surely the punters risking big money on the spread markets don’t believe that Huhne or Clegg’s Lib Dems will finish up only being down 12 seats on their 2005 total?

With three polls due out in the next few days we might see a bit more movement. The spread that is under-valued here is the Tory one and a buy bet here might be the right thing to do.

Mike Smithson