The Betfair Prof / Leighton Vaughan Williams / 29 September 2008 /

The polls may bring bad news for Brown, but the betting markets bring worse!

It's a well-established fact that party political conferences (or conventions, as they are termed in the US) tend to produce a bounce in the opinion polls for the party hosting the event.

True to form it worked for Barack Obama and it worked for John McCain. It worked for the Liberal Democrats and it appears to have worked (according to a recent YouGov poll) for Labour. To be precise, the online pollster registered a seven point bounce in Labour's standing after Gordon Brown's keynote speech compared to polling conducted before it.

This is certainly good news for those in favour of keeping the Prime Minister in his job and pre-empting a leadership contest. The problem with all this is that polls ebb and flow with what often looks like crazy abandon in response to the latest burst of positive or negative publicity, and in any case only register what people say they would do if there were to be a general election tomorrow.

In truth, there will not be a general election tomorrow and the opinion polls are not forecasting tools. Instead they are mere gauges of public sentiment at a moment in time. Worse still, we cannot be sure how many of those expressing their support for the opposition parties are doing so as a type of cheap and easy protest vote.

This certainly occurs in by-elections, which is why we so often witness huge swings against the governing party during the mid-term. Voters know they can register a protest at by-elections without actually changing the government.

For all these reasons, Labour party strategists could do worse than look to the betting markets to measure the impact of the announcements in the Prime Minister's speech for the likely fortunes of the Labour Party at the next general election.

In the immediate wake of the speech, with the YouGov poll bolstering party spirits and the chance of a challenge to Gordon Brown seeming to diminish by the hour, the Betfair market registered barely a murmur of interest. As before the speech, the chances of a Conservative overall majority stood at 63%, with a 77% chance that the Tories would win the most seats in the House of Commons. By contrast, Labour's hopes of holding on to their majority were represented in the market at just 14%. Nothing much has changed since.

It's a point taken up in an excellent article in this week's 'Economist', a regular read at No. 10 Downing Street . In a piece entitled 'Dead-cat bounce', much the same point is made. For that analysis, featuring the Betfair prices, I was interviewed and accurately quoted: "If you're dissatisfied with the government, you may tell a pollster you'll vote for the opposition. But gamblers bet on what they think will happen, not to register a protest. After all, it's their own money they stand to lose."

The Prime Minister is perhaps hoping that none of malcontents in the Labour Party read the Economist. With a readership of 4 million, this is perhaps too much to hope for. The better hope is that the possible players in any leadership plot have no faith in the betting markets. We shall see.

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