This article originally appeared on Political Betting on 4th May 2021
The modern era of political betting began in 1963 when Ladbrokes’ Ron Pollard opened up a book on the Conservative Party leadership contest. Shrewd punters could back the outsider Alec Douglas-Home at 16/1 over the hot 5/4 favourite Rab Butler…..
In recent years we have seen political betting reach new heights, becoming an integral part of the political narrative itself. Figures as diverse as Jeremy Corbyn, Nigel Farage and Donald Trump have traded on their tag as “underdogs” to cause some of the great political upsets. This has brought a new focus and interest to the betting markets, emphasised by the 2020 US election where £1 billion was traded on the outcome.
For students of British politics, the past eighteen months have been quiet ones – following a decade of shock referendum, leadership and election contests. Super Thursday brings punters straight back into the action with seats on English councils, the Scottish Parliament and the Welsh Assembly up for grabs. London Assembly elections, directly elected mayors and police commissioner elections are also taking place on the same day.
But it is to Hartlepool that eyes are drawn. In the first by-election of the post-Corbyn, Covid era, we are about to discover whether the recent alignment in Labour’s Red Wall was temporary or altogether something more permanent.
It is a sign of how far the tectonic plates of British politics have shifted in the last decade that a Conservative Government – after eleven years in office – are the favourites to take this seat. Under New Labour – in 2004 – Peter Mandelson triggered a by-election in the seat in order to up a job as EU Trade Commissioner.
In what seems like an alternative universe, Labour opened up as the 4/9 favourites but faced a challenge from the resurgent Lib Dems under the stewardship of Charles Kennedy. Despite being in opposition for seven years, the Tories were the rank 25/1 outsiders and thought to be no hopers.
It proved to be the case. In what was seen as one of their worst results in modern times, Micheal Howard’s party was pushed into a humiliating fourth place behind UKIP.
If the Tories do win Hartlepool this Thursday, then the political omens do not look good for Keir Starmer. In the past sixty years, only two main Opposition leaders have lost a seat to a Government. Both leaders then led Labour to their heaviest post-war election defeats.
In 1981, Michael Foot led a divided Labour Party into the Mitcham and Morden by-election with little hope of retaining the seat. The rise of the SDP and the “Falklands Factor” made the Tories 4/5 favourites.
The Tories pulled off a victory when won the Labour vote dropped by 20%. It was seen as a disaster for Michael Foot. Still, Labour comforted themselves with thoughts that people would soon return to the “real issues” of unemployment. They never did.
Fast forward to 2017, and another Labour leader came under pressure in Copeland. Despite having held the seat since its creation in 1983, bookmakers predicted that Jeremy Corbyn’s Labour would lose it.
In a precursor to the realignment of Labour’s Red Wall, Theresa May’s party opened up the 11/10 favourites, with UKIP expected to mount a decent challenge too. Early punters were rewarded when the Tories went off at 1/3 on election day.
The increase in the Conservative vote was the biggest enjoyed by a government party in any by-election since 1966. Memories of 1966 were at the front of Theresa May’s thoughts when she subsequently called a snap general election. May was following in the footsteps of Harold Wilson, who, in 1966, was thought to be under tremendous pressure in a by-election in Hull.
His administration was under attack from both left (over Vietnam) and right (on the economy). Bookmakers expected the Tories to win the seat as 4/6 favourites and push for the collapse of the government.
But when one punter lumped £5000 on Labour (the equivalent of £80000 today), Ladbrokes cut the odds to 4/5 in Labour’s favour. In the days running up to the poll, the odds changed again as the local papers predicted a Tory upset.
Labour won the seat with a significant majority of over 5000. Even the Daily Mail had to declare that it was a “devastating display of confidence” in the government. Wilson went to the country a few months later and secured a majority of 96.
Punters with an eye on the next election will be looking at Hartlepool to see what it says about Boris Johnson’s position as Prime Minister.
In 2008, Crewe and Nantwich signalled the beginning of the end of the New Labour era. Cameron’s Tories opened up as 4/5 favourites but were soon backed in despite having not gained a seat in a by-election since the early 1980s.
Over £100,000 was staked on the Crewe and Nantwich by-election which ushered in the new age of big political punting. William Hill took their biggest ever single bet from a customer in central London who placed £40,000 on the Tories to return £2500 profit. Hills slashed the price of a Conservative victory from 1/16 to 1/20.
It proved to be an easy win, with the Tories securing victory on a 17.6% swing. David Cameron said it was a “remarkable victory”, was the “end of New Labour” and the start of “something bigger”.
A few months later, Ladbrokes declared that they had taken more bets on the Glasgow East by-election than any other previous contest. Labour opened up the 4/11 favourites with the SNP priced up at 15/8 as Brown’s premiership hit the rocks.
A spokesperson for Ladbrokes admitted that there was “unprecedented interest” in the seat that at any other time “would be regarded as a relatively safe seat”. With a week to go, over £250,000 had been staked across the industry.
The SNP took the seat and declared it “not just a political earthquake, it is off the Richter scale”. It marked the beginning of its decade long slump into the political wilderness in Scotland.
A New Dawn
Not all by-elections signal a political “sea change”. If we go back to the 1980s, a series of significant by-elections appeared to signal the dawn of the SDP/Alliance as a dominant political force.
In Warrington, Labour had opened up as 1/3 favourites but was pushed all the way by Roy Jenkins. A few months later, bookmakers made Shirley Williams a 4/5 favourite to take out Crosby and make a grand return to the Commons.
Bookmakers stopped taking bets after £10,000 was punted on her in the first few days of campaigning. Williams won with ease and claimed that it was “a new dawn” for British politics.
The bookmakers rushed to the same conclusion. In December 1981, they made the SDP/Liberal alliance the 11/10 favourites to win the next election. Mrs Thatcher was priced at 2/1 to hold on to her majority – while Labour were priced up at 9/4 to make a comeback under Michael Foot.
Thatcher’s subsequent landslide shows the importance of the long game for punters. The SDP/Alliance would, however, prove good value for punters throughout the 1980s as they mastered the art of the midterm by-election. In 1985 they took out Brecon and Radnor as 7/4 outsiders. They repeated the same again in 1987, when, priced at 9/2, they defeated the Labour Party in Greenwich.
Governments are also capable of confounding bookmakers predictions of impending collapse. In 1977, following the death of Tony Crosland, Labour were expected to lose the fishing town of Grimsby as unemployment spiralled.
Austin Mitchell was priced up as the 11/4 underdog. Mrs Thatcher was praised for taking the fight to a “traditional” Labour area. “I hope to be Prime Minister one day and I do not want to there to be one street in Britain I cannot go down”. But against the Tory Party’s expectations, Mitchell held on to the seat. Critics began to wonder whether Mrs Thatcher could break down Labour’s stronghold in the industrial north.
It was a similar story for Ted Heath in 1972. Commentators expected him to be in trouble in Uxbridge due to government unpopularity on “the big issues of living costs, unemployment and immigration”. Manuela Sykes – who joined the Labour Party from the Liberals – was the heavy 2/5 favourite to take the seat.
To the surprise of most, the Labour vote share actually went down and the Tories held on. Commentators began to speculate whether it was the end of the Harold Wilson era: ”It is the most devastating indictment that has ever been of an Opposition that pretends to be an alternative government”.
Two years later, however, Wilson was back in Number 10 and it was Heath’s career that was done.
Once in a while comes a by-election that appears to take everybody – including the bookmakers by surprise. For those who believe that the Northern Independence Party can cause a shock in Hartlepool, George Galloway may provide them with some motivation.
In 2012 he drove one of the all-time great shocks in Bradford West, priced at 33/1 against Labour’s 1/50 shot Imran Hussein. In a hotly contested battle, Galloway was backed in from 20/1 to 10/1, then 5/1 in the first week of campaigning.
Ladbrokes were slow on the uptake, misreading a series of heavy bets placed in the city. When Galloway upset the odds, Ladbrokes alone lost £100,000 in what they described as their “worst by-election ever.” Ladbrokes said that Galloway’s supporters “pulled off a political gamble of epic proportions.” The firm had “naively assumed the money at big prices was an attempt to slash the odds for the campaign. We couldn’t have been more wrong.”
In the 1970s, one politician pulled off one of the great shocks – and made himself a tidy profit as a result. In the Isle of Ely, Clement Freud, the grandson of the psychologist Sigmund, also opened up at 33/1 to take the seat for the Liberals.
Freud was a keen gambler (rumoured to have won a six-figure sum betting on the 1979 general election) and was stunned at the price on offer for him. Calculating that the bookmakers would pay out £10,000 on the market, he put £300 down on himself.
Within hours his odds were cut to 8/1, then 6/1, awakening political editors to momentum in his favour. “The clever money seems to be Freud”, reported the Daily Telegraph. Freud joked that it was actually the “Freud money that had gone on Freud”.
He took and later joked that “it was only because so many people had backed me and wanted a return on their investment”. His winnings of £10,000 was double the yearly salary for an MP at the time and is the equivalent of winning around £85,000 today.
A decade later, Freud sensed another Liberal upset on the cards in Bermondsey. Peter Tatchell opened up as the 1/8 favourite to hold the seat for Labour but Freud staked £60 at 16/1 on their candidate Simon Hughes. In what later became seen as one of the dirtiest by-elections in post-war history, Tatchell was heavily attacked for his sexuality and was a victim of a relentless homophobic campaign against him.
Freud sensed an upset and went in again at 5/1, and as the race entered the final week, the bookmakers still made Labour the ½ favourites, so Freud went in again at 7/4. The market finally settled at 5/6. On election day, Freud lumped another £600 on – admitting that it felt “very close to insider trading”.
Simon Hughes won the contest and Freud chalked it up as another great victory. “I accept that bookmakers know more than me about horses. But the reverse is true when it comes to politics”.
It remains to be seen whether the bookmakers have called the Hartlepool contest right. Either way, the result could be another “fork in the road moment” for British politics. In the first electoral test of the Johnson and Covid era, we are about to find out who some of the key voters trust to lead Britain in the coming decade.
It may well be looked back upon as one of the defining political by-elections of our age where the Tories either cement their hold on the ‘Red Wall’ or Labour begin their long and arduous fight back to government. For the punters hoping to get a feel of where the country is at, after the most unprecedented year, the contest can’t come soon enough.