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Monday Call – August 2 2004 [Next planned update – Wednesday]

August 2nd, 2004

foul

    Are the Tories right to cry “foul” over the “biased” electoral system?

The Tories are said to be drawing up plans to attack the “inbuilt advantage” in the electoral system that in recent elections has given Labour far more seats in proportion to votes cast than the other parties. In 2001 the Tories needed to get almost twice as many votes for each seat while the Lib Dems required three and a half times more.

Partly this was due to lower turnouts in Labour seats and that its incumbents did a bit better than the national average – both elements that its hard for the Tories to make a fuss about. But Labour did get the equivalent a 20+ seat bonus because its seats had on average much smaller electorates.

    But the real problem for the Tories was that people were so opposed to them that they switched parties to get them out costing 40-50 seats. Will this happen on the same scale as last time or will Labour also be the victim of tactical voting?

The small electorate in Labour seats bonus has been partly resolved through the boundary changes in Scotland that reduce MPs north of the border from 72 to 59 – something the spread-betting markets have yet to notice. The Welsh over-representation remains and in England Labour seats have, on average 6,000 fewer voters than the norm. At the next election these elements should give Labour a bonus of 12+ extra MPs.

But this is far from certain. The Respect victory in a council by-election in Stepney last week and the Labour losses to the Lib Dems in the cities on June 10 underline that all is not as it was in Labour’s small inner city seats where only a few votes need to change hands. There’s also the University factor discussed in the previous article.

The Tactical voting Labour bonus was by far and away the main distorting factor last time and was caused by people feeling so strongly that they wanted the Tories out that they switched from their normal affiliation. Estimates range from 25-40 of the extra seats Labour got at the expense of the Tories because of anti-Tory tactical voting. The Lib Dems got about 15 seats. But this is all part of the democratic process and the Tories can’t really complain – in any case they might be the beneficiaries next time round.

    The big unknown is the extent of the benefit, if any, that Labour will get from tactical voting. Might it even work against them with a net loss of seats?

We all need to be aware that Election Prediction calculators like Martin Baxter’s apply the changed poll rating to what happened in 2001 and assume that the Labour benefit will stay constant. The Labour spread betting prices are based very much on this with tactical voting continuing as it was and the Scottish anomoly remaining.

MAIN CALLS
Labour to win most General Election seats.

BUY Lib Dem in the General Election spread markets because we believe the party will get more than the 68 seats – the current spread position. SELL Labour at 346 in the same markets because they are vulnerable to the Lib Dems in many city seats and they can’t rely on the tactical voting cushion.

DON’T BET against Tony Blair, Michael Howard or Charles Kennedy in the various party leader markets. We believe that they will all be the leaders of their parties on election day.

We believe that the election will be held on the first Thursday in May 2005 – 05/05/05.

DON’T BET on the outcome of the UK Euro Constitution Referendum. We do not know when the vote will be held and this could be in 2006. Current prices offer no value either way.

POSSIBLY BET on Peter Mandelson not lasting the course in his new job in Brussels as a European Commissioner. William Hill have 3/1 on Mandelson not doing a full term. Given what’s happened with his last two jobs then this price looks quite good.

BET on John Kerry to be the next US President.

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Mike Smithson

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