The market thinks the SNP will win 25-26 seats, not 50-plus. Photo: Getty.
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Who do the betting markets think will win the election?

The markets are clear: the SNP surge is over-hyped, Ukip will win few seats and a hung parliament is extremely likely.

This piece was originally published on May2015 – our general election microsite.

In the beginning there was the betting market. Long before anyone worked out the basics of statistical sampling, quotas or past vote weighting, the betting markets proved remarkably accurate in predicting political outcomes.

And in recent years things have only got better. New exchanges, such as Betfair, have eliminated the bookie, and allowed customers to create their own markets. Each punter can choose to either take a bet (the normal method everyone is familiar with) or “lay” one (in effect becoming the bookie).

If the market has many returning punters – if it is “active and deep” – you can have faith in the odds the market is offering. Bias is all but eliminated. And you can then work out the implied probability of an event, like who is going to win the next election. This involves a little maths but is relatively simple to do.

The bookies were an invaluable insight during the independence campaign, when they always heavily favoured a unionist victory. When the polls narrowed in September, the likelihood of a “No” vote fell, but still never dropped below 65 per cent (having been more than 85 per cent in August).

We can now use the bookies to track the implied probabilities of outcomes in May 2015. Here are five things they show which the polls miss.

1. Prepare for a hung parliament

While the polls still have Labour ahead for now, many are adamant it will all turn around for the Tories in the last few months. My response to that would be the market does not agree with you.

In the last few months "no overall majority" has become by far the most likely election outcome. The probability of it is now greater than 70 per cent. Compare that to Labour's and the Tories’ chance of winning a majority – they are less than 20 per cent.

2. Largest party? It's 50:50

The "long" election campaign theoretically only just started, but it's been quietly raging since 1 September. Back then, when Labour had a consistent 3-4 per cent lead in the polls, Labour were favoured to be the largest party by 58:42. After Labour's challenging autumn and early winter, those odds are now effectively 50:50.

Ladbrokes, the bookies, agrees. They think the odds of either party winning the most seats is 10/11 (52 per cent). [1] William Hill even slightly favour the Tories: they also put the Tories' odds at 10/11 but Labour's slightly lower – at "evens" (50 per cent).

3. No one has any idea what the post-election government will be

Both of the above markets are relatively active and deep so one can be confident about the information contained within the prices. In the more exotic markets you start to get quite speculative, however even here we can see a few interesting pieces of information.

For example the market for the next “type” of government is basically a shrug of the shoulders, with money spread everywhere and “any other” more likely than any specific scenario. Should we prepare for a Tory or Labour-led government? A majority or minority? A coalition involving the Lib Dems? All outcomes rate as equally unlikely.

For anyone thinking the next government is going to be a Tory/UKIP coalition, right now you have a 94 per cent probability of being wrong.

4. The SNP surge is only being taken half seriously

In Scotland we are all mulling over the possibility of an SNP advance after the independence referendum. Right now the party are riding high in the polls with double-digit leads over Labour (predict how many seats they might win on May2015).

This has led to near weekly forecasts that the SNP will sweep all of Scotland. The markets are, as yet, unconvinced. The SNP currently hold six seats. Polls suggest they could win the vast majority of Labour's 40 seats and all of the Lib Dems' 11. May2015 recently looked at why they might struggle to win more than 20 Labour seats. The bookies agree – Ladbrokes thinks they will win 25-26, adding 19-20 to the six they currently hold.

The bookies think the SNP will win 25-26 seats, not 50-plus.

The exchanges offer less precise odds but concur – they suggest the SNP will to more than 12 but fewer than 35. If we look to the polls, something revolutionary is going on in Scotland. If we look to the markets, the SNP is surging but will still be smaller in 2015 than Scottish Labour are now. Wait for the markets to move before taking the latest apocalyptic poll too seriously.

5. Ukip are not expected to win many seats

The other big unknown in May is Ukip. They are consistently polling around 15 per cent. They now have two MPs, and Lord Ashcroft's polls have suggested they are challenging in another half a dozen or so.

But the markets suggest they will only win between three and six seats. What should you trust? The betting exchanges offer a crowd-sourced level of analysis of what is expected to happen in May – only a mouse click away. The more you get into analysing odds the more you will start to understand their power (and limitations).

The information is even updated second-by-second, so you needn't wait for the latest polls to get an idea of who is up and down. [1] The combined odds are slightly greater than 100 per cent because of the "over-round", which is how bookies make money.

May2015 will keep you updated with the latest odds – on which party is expected to win the most seats and most votes, who is favoured to be the next PM, and what the next government will be, from now until May.

May2015 is the New Statesman's new elections site. Explore it for data, interviews and ideas on the general election.

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Lord Sainsbury pulls funding from Progress and other political causes

The longstanding Labour donor will no longer fund party political causes. 

Centrist Labour MPs face a funding gap for their ideas after the longstanding Labour donor Lord Sainsbury announced he will stop financing party political causes.

Sainsbury, who served as a New Labour minister and also donated to the Liberal Democrats, is instead concentrating on charitable causes. 

Lord Sainsbury funded the centrist organisation Progress, dubbed the “original Blairite pressure group”, which was founded in mid Nineties and provided the intellectual underpinnings of New Labour.

The former supermarket boss is understood to still fund Policy Network, an international thinktank headed by New Labour veteran Peter Mandelson.

He has also funded the Remain campaign group Britain Stronger in Europe. The latter reinvented itself as Open Britain after the Leave vote, and has campaigned for a softer Brexit. Its supporters include former Lib Dem leader Nick Clegg and Labour's Chuka Umunna, and it now relies on grassroots funding.

Sainsbury said he wished to “hand the baton on to a new generation of donors” who supported progressive politics. 

Progress director Richard Angell said: “Progress is extremely grateful to Lord Sainsbury for the funding he has provided for over two decades. We always knew it would not last forever.”

The organisation has raised a third of its funding target from other donors, but is now appealing for financial support from Labour supporters. Its aims include “stopping a hard-left take over” of the Labour party and “renewing the ideas of the centre-left”. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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