General Election Betting: Labour's mini-comeback has limited potential

General Election Betting / Paul Krishnamurty / 05 February 2010 / Leave a Comment

Protesters make clear their feelings about the MP's expenses scandal

"The economy remains in poor shape, and even with a return to low growth, don't expect the government to get the credit."

Is a Labour comeback underway and can it be sustained? That's the key question being pondered by politics punters with 13 weeks left until the likely polling day, writes Paul Krishnamurty.

Having lead by double-digits for a couple of years, the five polls published last weekend produced an average lead of only 8% for the Conservatives. If replicated at the ballot box on May 6, we could well be looking at a hung parliament, so it was no surprise to see the odds on No Overall Majority (link market) shorten to [3.5].

Labour representatives do seem slightly more upbeat, and not without some justification. Rather than a one-off, these poll indicators appear to be part of a trend seen across all the main firms. In some cases, the lead has halved in the last few months, as cracks have started to appear in the Tory brand. Personal polls show that David Cameron's popularity has waned over the past couple of years, though he is still rated much more favourably than Gordon Brown .

A deeper, more worrying problem for the Tories either side of the election is that their plans for government are receiving a lukewarm reception at best. After confusion and some division over their policies for Europe, prisons and marriage tax allowances, their spending plans came in for much criticism this week. Ridiculing Tory spending plans has been Brown's successful modus operandi for the two previous elections, and Cameron appears confused about the best response. By talking the language of 'cuts' but failing to specify where they will fall, he risks appearing evasive and opportunist.

So long as these issues remain prominent in the news agenda, Cameron has good cause to be worried. But how likely is that? Governments dominate news cycles, not oppositions, and it's hard to find many issues coming down the track that portray the government in a good light. The economy remains in poor shape, and even with a return to low growth, don't expect the government to get the credit.

Then there's the ongoing Chilcott Inquiry into the build-up to war in Iraq. It can't help Labour to see that wound re-opened, especially now the focus has shifted from Tony Blair to Gordon Brown, and accusations that he failed to fund the troops sufficiently. I'm not expecting the polls to be kind to Labour in the aftermath of Brown's forthcoming appearance at the Inquiry.

We've also just been reminded of the lingering stench surrounding the MPs expenses scandal, with several prosecutions announced. Some say this affects all parties equally, but I've never been convinced. Labour MPs may be, on average, no more or less guilty than anyone else, but they are bound to be worse affected because they have so many current MPs. Moreover, whereas incumbent opposition MPs with a cloud over their name should be able to survive on the back of national swing trends, this just makes the uphill task of sitting Labour MPs even harder.

Where does leave us, and the main markets? The main anti-government narrative seems certain to continue, and that will sustain the feeling that its 'time for a change' currently held by two thirds of the electorate, according to the latest ICM/Guardian poll .

Such clear sentiment markedly restricts the scope of any Labour comeback irrespective of wider concerns about their replacement. For that reason, I wouldn't be interested in laying the Conservatives at [1.15] to win the most seats, even if they're anything but certain to land the [1.5] about them winning a majority.