Politics Betting: Ignore 'Red Ed' jibes and back Labour for next election

UK Politics / Paul Krishnamurty / 26 September 2010 / 3 Comments

Labour's Obama?

"Saying that a leftish Labour Party can't win now because it couldn't do so 30 years ago involves a similar logic to the one that said the US would never elect a black, left-wing President."

Ed Miliband wasn't the only winner this weekend - Paul Krishnamurty is also celebrating after backing the new Labour leader at long odds. Now our man is backing Ed to lead his party back into power...

At last, following a prolonged contest that was beginning to test the patience even of us politics junkies, Labour has chosen a new leader, Ed Miliband. Happily, my Betfair balance is significantly up, having tipped the younger Miliband weeks ago and without any further delay, I'm reinvesting some of the profit into another long-term political market.

Betting on the outcome of the next General Election, scheduled for 2015, may seem like a long wait for payout, but it needn't necessarily be the case. This is easily the most liquid long-term political market, always offering the potential to close out a position in order to free up funds. If the last Parliament is any guide, we can expect many volatile swings.

The most dramatic turning point came when Gordon Brown opted against calling a snap election in the autumn of 2007, after punters had backed Labour down to less than [1.4] in expectation. Within days of that disastrous decision, the Conservatives were odds-on and never looked back. Though the current Conservative/Lib Dem government are legislating to create fixed term parliaments, there remains a chance that an election will need to be called earlier than 2015, if the coalition were to fall apart. Whatever happens, speculation is inevitable.

We need to revisit May's election result. Labour may have lost power, but their result was better than many expected. Approaching polling day, they were often in third place behind the Lib Dems, prompting talk of them being eclipsed as the leading centre-left party. As it turned out, they beat the Lib Dems by 6%, winning over 200 more seats. Moreover, the Conservatives' 37% tally and failure to win a majority was hardly a ringing endorsement.

One poll estimated that 40% of the electorate remained undecided with 24 hours to go, and that confusion was reflected in the result. Five months on, and things are hardly any clearer. The Conservatives and Lib Dems have formed an uneasy coalition, which is proving to be particularly costly to the latter. Recent polls have tended to show the Conservative lead over Labour much reduced, with Lib Dem support massively down since May. A Yougov poll last week had the big-2 tied on 39%, with the Lib Dems on a miserable 13%.

Given that most governments enjoy a honeymoon period, this is a remarkable position for Labour, especially as they've been without a permanent leader since May. Compare the equivalent situation after Labour had regained power in 1997. Five months into Tony Blair's government, Labour had increased their lead from 13 to 22 points.

The inescapable truth is that we are living through an austere era during which it is extremely hard to govern. There is no good news to be delivered, and this government's worst is yet to come. Next month, they will lay out the biggest spending cuts in 90 years. Opinion remains divided over whether the cuts are the right course of action, but relatively few have felt the pain as yet. The next election will doubtless be fought over the wisdom, or fairness, of this cuts strategy but in the short-term the government must be prepared for unpopularity.

Just that short-term trend is reason enough to back Labour at around [2.3]. New leaders tend to get a positive early hearing. I'm confident that Ed will perform well at this week's Labour conference, and am expecting an early poll bounce. That was exactly what happened when David Cameron took over, in not dissimilar circumstances after a protracted campaign in 2005.

However, I'm also confident that Ed will prove successful as Labour leader, and expect conditions to be ideal for a swift return to government. The reason the polls have narrowed since the election is quite clearly in response to the Lib Dems' controversial decision to ally themselves with the Tories. Throughout the Blair era, Labour shipped millions of votes to the Lib Dems, who positioned themselves to their Left on a series of issues. Particularly against the Iraq war and tuition fees, two positions which Ed Miliband has notably distanced himself from. Roughly 7% have shifted from the Lib Dems to Labour since May.

Then there's the momentum factor. Next May, there are elections to the Scottish Parliament, Welsh Assembly and councils across England. Starting from a low base, Labour is widely expected to make strong headway, particularly at the expense of the Lib Dems. That in turn could well put the skids under their leader Nick Clegg, and even the coalition itself.

Of course, there is an alternative opinion, that can be found in the Tory blogs and press. They've already dubbed the new leader 'Red Ed', the 'union poodle', because his victory relied heavily upon the support of millions of trade unionists. My view is these commentators are stuck in a timewarp, reliant on comparisons with the 1983 election that are irrelevant today.

Back then, Britain led the EU in terms of days lost to strikes, and militant union leaders were the norm. The Labour movement was split, between Militant on one side, and the breakaway SDP on the other. Labour's anti-Trident stance was unpopular at the height of the arms race, and they were up against a flag-waving PM who'd just won a war in the Falklands. Most critically, the average swing voter was slowly but surely seeing an improvement in their living standards under the Thatcher government.

British politics today bears little resemblance. The unions are tame, with the exception of the RMT's Bob Crow, who is no friend of the Labour Party anyway. The TUC is unlikely to sanction massive, unpopular strikes. There is no Cold War, or successful foreign conflict. There is little but pain to offer those median swing voters this time, who will see their taxes rise and services deplete.

In short, the political rules and labels of the 1980s are no longer relevant. In 2015, nobody under the age of 50 will have voted in the 1983 election. Saying that a leftish Labour Party can't win now because it couldn't do so 30 years ago involves a similar logic to the one that said the US would never elect a black, left-wing President. Mark my words, Labour will be trading at odds-on for this market in the not too distant future.

Recommended bet: Labour to win most seats at next General Election @ [2.24]

Comments (3)

1. Dr George Abbott White | 26 September 2010

   Market and investing analogies aside, this account strikes me as fair and insightful, the historic perspective useful and accurate. Ed is certainly well informed as a leader and has more character than most of his European counterparts. What's missing for me - and I suspect other readers - is the fact that half of Labour went for Ed's brother David. What's missing are the implications of that fact, chiefly positive to my mind - with the two of them pulling in tandem, Labour has the extrordinary opportunity not only to win the next election (soon one hopes) but to put into place policies Blair was unable or unwilling to attempt. The only issue is getting on with it, now.

2. Mohammed Hossain | 27 September 2010

   Labour must come back in the next election. Conservative party what they told before the election and Also told they will cut the prices but they have put prices up. Even Vat up.I hope Labour Party will be able to make the changes and run the country.

3. maxliu | 28 September 2010

   Terrific article - full of the type of clear, original insights lacking from the broadly-Blairite press coverage of EM's election. I'm particularly taken with what you point out about 1983 and voters under 50. Ed must use the changing media landscape to Labour's advantage and speak to young voters, in the way Obama did, who possess genuine hunger for a fairer society.