UK Politics Betting: Isolated Cameron is on borrowed time

Is Theresa May positioning herself to challenge David Cameron?
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In the aftermath of the Eastleigh by-election and a spate of negative polls for David Cameron, and there's a febrile atmosphere in Westminster. Paul Krishnamurty argues the PM is in trouble and that means there's money to be made across a series of markets...

"Rather than let the story die down, May made a speech yesterday that carried all the hallmarks of a putative leadership bid. In addition to populist noises within her remit, regarding the arrest of Abu Qatada and a future Tory government leaving the European Convention on Human Rights, May took the bizarre step of laying out her economic vision and industrial strategy."

With public interest tending to focus on one-off events like elections and leadership contests, political betting is an occasional affair. For most of the year, markets lay dormant while Westminster apparently goes about its business as usual.

Yet, every so often, the plotting that is part and parcel of any political scene shifts from private conversations to headline news, and all hell breaks loose in betting markets. Think, for instance, of the manic betting activity that surrounded every potential coup against either Tony Blair or Gordon Brown. In the end, the former resigned of his own accord, on the day of his choosing, while the latter only quit having fought and lost the 2010 election. That didn't stop fortunes being won and lost on their exit dates, as punters reacted and over-reacted to excitable Westminster Village opinion.

In such an environment, the key to successful betting is staying ahead of the game. For those who can be bothered to follow the machinations in the serious press, working out who speaks for whom and their agendas, there is always an angle to foresee looming political earthquakes. As the parties weigh up the fallout from the Eastleigh by-election and look ahead to George Osborne's Budget in ten days time, there is more than a hint of plotting in the air and punters should be alert to developments.

Victory for the Lib Dems in Eastleigh may have provided the beleaguered Nick Clegg with some short-term respite but the result could have profound implications for the coalition. However his allies may spin otherwise, finishing third behind UKIP was an unmitigated disaster for David Cameron's so-called 'modernisation' project. Numerous Tory commentators are speculating that he will face a leadership challenge some time this year, and that critics are keeping their powder dry until after the budget.

If Tory plotters are keeping their plans to themselves, that hasn't stopped the media from speculating. In a week packed with bad news for the government, the story that may worry Cameron most concerns a plot to replace him and Osborne with Home Secretary Theresa May and Defence Secretary Philip Hammond, both of whom are defending their departments from further spending cuts. 

Rather than let the story die down, May made a speech yesterday that carried all the hallmarks of a putative leadership bid. In addition to populist noises within her remit, regarding the arrest of Abu Qatada and a future Tory government leaving the European Convention on Human Rights, May took the bizarre step of laying out her economic vision and industrial strategy. Home Secretaries are simply not supposed to do this ten days before a Budget.

Nor is May the only Tory breaking ranks. I wrote weeks ago about the strange rumours concerning Adam Afriyie - a potential 'stalking horse' acting on behalf of Boris Johnson. The Times reports a dinner table plot by named right-wingers to destabilise the coalition, angry about having to share power with the Lib Dems.

Yesterday's ConservativeHome conference took place against the gloomy backdrop of activists worried that the next election is already lost. A poll for the site found that only 7% believed Cameron would win a majority at the next election while another survey of marginals predicts a Labour majority of 84. Today's Observer poll will hardly lift their spirits, showing UKIP recording their highest ever rating.

Then there's Cameron's coalition partners, desperate to regain their identity and increasingly confident post-Eastleigh. Business Secretary Vince Cable caused his own stir last week by contradicting Osborne's austerity plan and appearing to side with Labour stimulus plans that the coalition loves to deride. In response, Cameron was forced to make a hasty speech reaffirming his economic priorities, only to incur the wrath of his own economic watchdog for misrepresenting their reports.

This is not a good place for any Prime Minister to be and Cameron increasingly resembles the last Tory PM. Weak, incapable of controlling his own party yet, unlike John Major, also having to deal with coalition partners. Just as Tory MPs made Major's life a misery, the party has shown itself prepared to oust leaders mid-term, as Iain Duncan-Smith and Margaret Thatcher will testify. Many on the Right were always suspicious of Cameron's liberal tendencies but bit their tongues because they thought he was a winner. With the last election and every current poll suggesting the opposite, Cameron may be on borrowed time.

So how might punters profit from the looming turmoil? I've already advised a bet on Boris to be Next Conservative Leader - by far the Tories' best chance of winning the next election - and recommend adding Theresa May at [8.0] to the portfolio now she's clearly shown her intentions. She's also worth a punt at [21.0] in the Next Prime Minister market, for which odds-on Ed Miliband has moved into lay territory, given that the post may become vacant before he even gets a chance to apply.

There is also the Leaders Exit Dates market which offers three-month options for Cameron's departure and finally, the Party Leaders market covers all the options regarding which of the three main party leaders will still be in post at the next election. As I've been saying for ages, laying the Cameron/Miliband/Clegg option around [2.0] represents superb value.

Recommended Bets
Back Theresa May @ [8.0] to be Next Conservative Leader
Back Theresa May @ [21.0] to be Next Prime Minister
Lay Cameron/Clegg/Miliband @ [2.0] in Party Leaders at Next Election

Paul Krishnamurty,

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