General Election 2010: Three hung parliament scenarios and the betting implications

UK Politics / Paul Krishnamurty / 27 April 2010 / Leave a Comment

What will this election bring parliament?

"Unlike their nearly bankrupt rivals, the Tories are awash with cash and would therefore enjoy an even greater advantage than they do already. Assuming we get that hung parliament, constant speculation would be guaranteed, suggesting [3.5] about 'Two elections in 2010' offers plenty of trading mileage."

British politics is entering unprecedented territory and punting opportunities abound as the various likely scenarios appear. Paul Krishnamurty examines three options

With just nine days until the election, both political commentators and the punting community are united about one thing - we're headed for a hung parliament. Virtually every poll in the last fortnight has forecast that outcome, driving the odds into this morning's shortest ever quote of [1.58]. Even at these much reduced odds, I wouldn't even consider laying, given the apparent tightness of this three-horse race.

British politics is entering unprecedented territory and it would take a brave man to confidently predict the future beyond next week's result. Any of the following three very different scenarios are plausible, and have big implications for long-term betting markets that look set to run and run.

Scenario A: Conservatives win the most votes and most seats.

The polls may be going wrong for David Cameron, but this remains by far the likeliest outcome. Labour are stuck in third place, and will do extremely well to avoid losing the 70-odd Con/Lab marginals that would make the Tories the largest party.

The Lib Dems have been clear that they would support the right of the party with the best mandate to have first crack at forming a government. 'Supporting the right' is a rather different proposition to actively propping up, though. A formal coalition with the Lib Dems is highly unlikely, because party members on either side just couldn't stomach it. The consequence, I suspect, will be a minority Tory government that seeks to win votes issue by issue, just like the minority SNP administration does in the Scottish Parliament.

Such a balance would be extremely difficult to sustain, and there would certainly be a Tory faction urging Cameron to call a second election. Unlike their nearly bankrupt rivals, the Tories are awash with cash and would therefore enjoy an even greater advantage than they do already. Assuming we get that hung parliament, constant speculation would be guaranteed, suggesting [3.5] about 'Two elections in 2010' offers plenty of trading mileage.

Fancy this scenario? Back 'Yes' to '2 Elections in 2010' at [3.5]


Scenario B: Labour to win the most seats, without winning the popular vote

Incredible as it sounds given their rock-bottom poll ratings, this is the outcome predicted by most of this morning's polls. The latest 'gold-standard' ICM/Guardian poll has Labour in third place on 28, with the Lib Dems on 30 and Conservatives on 33. According to electoral calculus, this would result in Labour getting 263 seats, Conservatives 254, Lib Dems 101. David Cameron could forget about forming an immediate government, and Gordon Brown would still have his work cut out to survive.

Nick Clegg has already said it would be preposterous for Brown to remain as PM having finished third, but he hasn't ruled out working with a different Labour leader. Step forward either David Miliband or Alan Johnson, both senior Labour figures with one eye already on the leadership. Critically, both have previously expressed support for the key Lib Dem priority of electoral reform.

Fancy this scenario? Back David Miliband @ [12.0] & Alan Johnson @ [15.0] to be 'Next Prime Minister'


Scenario C: The Lib Dems win the popular vote, yet still finish last in terms of seats

The punters who backed them at up to [940.0] to win the most seats will be devastated when they realise just how badly our first-past-the-post electoral system treats the Lib Dems. For instance, a popular vote share of Lib Dems 34, Con 32, Lab 24 apparently produces seats totals of Con 258, Lab 200, Lib Dems 160. I actually suspect this considerably overstates the Lib Dem total.

Cue constitutional crisis. The Conservatives hold the most seats but lack legitimacy as election losers. Their opponents will feel under little obligation to co-operate with Cameron. Labour cannot expect to provide the PM after such a disastrous result. The only man with any real legitimacy is Clegg, having transformed the election in extraordinary style and been widely recognised as the winner. The most sensible outcome would be a Lib/Lab coalition, with Clegg as PM. Hopefully, those unlucky punters who backed them to win the most seats also had a couple of quid on Clegg at [1000.0].

Fancy this scenario? Back Nick Clegg to be 'Next Prime Minister @ [11.0]