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South Shields By-Election Betting: Don't bank on the UKIP bounce ending any time soon

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As usual, the first Thursday in May means a big night for UK politics, with the South Shields by-election and thousands of seats being contested in local elections. With UKIP widely expected to maintain their recent progress, Paul Krishnamurty assesses the longer term implications... 

"This level of scrutiny and hostility...is the price of success, or at least potential success, and reflects the growing fear UKIP generate amongst the political establishment."

Anyone following political news over the last few days will have noticed that, rather than either the government or opposition's various woes, the headlines have concerned a party without a single MP. Whether it's talk radio, the pro-European Observer or anti-European Sun, everyone seems to be having a pop at UKIP, their policies and controversial candidates. Even the normally cordial Ken Clarke called them 'a collection of clowns, against foreigners, with no positive policies' , a rehash of David Cameron's infamous 'loonies, fruitcakes and closet racist' quote from 2006. 

Nigel Farage may have been gracing our screens for years, but this level of scrutiny and hostility is completely new. It is the price of success, or at least potential success, and reflects the growing fear they generate among the political establishment. UKIP are steadily recording all-time highs, rating third in the polls, ahead of the Lib Dems. A close second place in Eastleigh was their best ever result and the fourth time they've finished runner-up in an English by-election during this parliament. Conservatives are deeply worried about the haemorrhaging of their core vote and defection of activists. Lib Dems fear that, since joining government, they've been usurped as the third party and recipient of mid-term protest. 

Even Labour can't rest on their laurels, as UKIP are slowly emerging as their main opposition across much of the North. Indeed, they are deemed by punters to be the only party with any hope of defeating Labour in Thursday's by-election for David Miliband's old seat, South Shields. As odds of [1.02] imply, Labour remain near-certainties to hold a seat they won by over 30% even in the dog days of 2010. The race to win without Labour has greater betting potential, although at the moment punters can't see beyond UKIP, taking down to [1.1]. While this does seem rather short for a party that didn't even bother contesting the seat in the 2010 General Election, one must consider the abject performances of Labour's principal rivals in recent Northern by-elections.   

More significant and likely to grab headlines is the fact UKIP are also contesting a record number of seats in the local elections staged on the same day. With the Conservatives already braced for a bad night, a repeat of the Eastleigh effect could have a catastrophic effect on their local infrastructure. UKIP ratings seem to have solidified since that latest by-election and a further bounce could put them within single figures of second place in national polls.

The bigger question therefore concerns whether they can ride out these attacks from political and media opponents over the long-term and meaningful impact the next election. There are two schools of thought. Historians will point out that UKIP are just the latest in a long line of mid-term protest parties that lack the depth to win constituencies under Britain's First Past the Post electoral system. Until they disprove that by winning one, they will likely be seen as a wasted vote for a General Election.

However a more contemporary analysis might observe that UKIP are riding the wave of anti-politics sweeping an austerity-hit Europe. If comedian Beppe Grillo's Five Star Movement can win a quarter of the vote in Italy, effectively in protest against political corruption, is it really asking that much for the main anti-EU, anti-immigration party to hang on to a mid-term poll rating around 15%? 

Whether they succeed or not, their emergence has profound implications for UK politics. If they retain that poll share in a year's time, UKIP will likely produce a best-ever performance at the European Elections, perhaps even winning the most votes. That would make Cameron's position extremely uncomfortable.

Another lesson from history is that Tories are prepared to knife losers mid-terms, and right now the polls point towards a heavy Tory defeat. With little good news on the horizon for the Tories, I must reiterate earlier advice to oppose Cameron in the Party Leaders at the next election market, with a view towards trading if and when rumours of leadership plots spook the market. 

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