Whatever the general public think of Jeremy Corbyn, the bookies must love him. He has been at the centre of one of the wildest betting markets I can recall, the Next Labour Leader market. He has not yet been leader of the Labour party for a year but already in that time we have seen wild oscillations. In that time, at least fifteen candidates have been traded on Betfair at prices of 10/1 or shorter (some far shorter). At the time of writing Owen Smith is the favourite and he was last traded on Betfair at 10/1. Some of the erstwhile darlings are trading in three figures. On the assumption that the conventional bookmakers have seen the same swings, it seems a safe bet that they must be sitting on a very tidy looking position.
*It is a very instructive market. Those punters who spent the last year on this market laying the favourite from time to time will be sitting on fabulous positions. Those punters who believed the hype will not. Fortunately I have in the main been laying rather than backing on this market.
But now there is no hot favourite. How should we play the market now?
The first thing to note is that the Betfair market has an underround. If you were to back all the candidates listed at appropriate stakes, you would get a profit of just under 3% if one of those candidates eventually got the job.
However, beware. There is no guarantee that the winner is currently listed. While 71 names might seem quite enough, there are more than three times as many Labour MPs in the House of Commons right now and it is entirely conceivable that the next Labour leader is not yet in Parliament. Jeremy Corbyn might yet have a much longer shelf life as Labour leader than is commonly expected.
Having struck that note of caution, I believe that it is nevertheless pretty likely that the ultimate successor to Jeremy Corbyn is on this fairly comprehensive list and the underround on Betfair is an indication that there is probably some value there. So, unusually, it looks like time to move from laying to backing.
It’s always harder picking winners than spotting losers. This is especially so in volatile cases, and the Labour party at present is pretty much the definition of volatile. So we should bet cautiously and seek to cover quite a few options.
The first thing that you need to do is take a view of Owen Smith’s chances in the current leadership election campaign. While I agree with Don Brind that we have no particularly definitive evidence of the result, all the straws in the wind are blowing in one direction. If Owen Smith loses this time it is hard at present to imagine him being given a second chance in the short term: the baton will pass to another challenger. So I’m betting against Owen Smith rather than on him.
So if Owen Smith falls by the wayside, what next? The non-Corbynites aren’t going to shut up. They’re going to leave the party or they’re going to wait for the moment to challenge Jeremy Corbyn again. We’ll probably see a bit of both. My own take is that they are unlikely to succeed but all things are possible. We can expect the non-Corbynites in due course to put forward a candidate who, like Owen Smith, is intended to appeal to the widest possible section of the party.
That rules out anyone on the right of the party who is unable credibly to tack to the centre. But it leaves candidates like Lisa Nandy, Stephen Kinnock, Keir Starmer and perhaps Dan Jarvis. None of them look particularly long-priced to me, however, given my assessment of their chances of success so I’ll pass for now. Next time the non-Corbynites should more seriously consider getting behind a woman challenger to play on the widely expressed fears of left wing misogyny. It was a mistake not to run with Angela Eagle this time. If there is to be another time, they should look again at this aspect.
We might yet see a unity candidate come forward if the party successfully seeks to put its differences aside under new management. It’s hard to see past Tom Watson for this role (Ed Miliband and Alan Johnson are other possibilities, and I have already backed Ed Miliband at 200/1). I’ve made sure that I’m long on Tom Watson.
The final – and to my mind most likely – permutation is that Jeremy Corbyn will in due course be replaced by another true believer. If Jeremy Corbyn wins this time, he should have the time and space to change the leadership election rules to ensure that Labour MPs cannot exclude candidates who the membership would vote for. Two candidates stand out: John McDonnell and Clive Lewis. I tipped John McDonnell at 50/1 and he is now available on Betfair at 10/1. To my mind he should be something closer to 3/1 since it is easy to imagine Jeremy Corbyn passing him the baton once the left’s grip on the party was unchallengeable. Clive Lewis has so far proved the most effective of the younger generation of Corbynites and would be less objectionable to the rest of the party than John McDonnell. He is currently priced at 15/1 on Betfair and again I think this price is far too long – I would make him something like a 4/1 shot. I’m very happy to have built up a position on both of these.
You will note that I have not considered what leader might be appealing to the general public. The next Labour leader will not be chosen by the general public and it is fairly clear that the Labour party electorate does not in the main regard that as a priority. So neither should we when placing our bets.