Labour's chances have been moderated by the predicted loss of seats in Scotland, but this merely moves around the arrangement of a coalition around Labour, it has not improved the Conservative's chances. Chances of the SNP being involved with Coalition or Confidence and Supply arrangements are quite significant, but approximately as much likelihood as a Labour/Liberal Democrat coalition. I should note that the model currently applies a strong revert to mean on Scottish vote share, which allows Labour to retain more seats than it would if there was an election tomorrow and Scottish polling has been correct. However, they are losing a significant number in a large amount of simulations, as reflected by the coalition probabilities.
To usher in the new year, and to reflect the changes in the political landscape from a strong SNP vote share, I've refined the logic used to decide what government an election result returns.
The logic is relatively simple. If any party has a working majority they get to form government alone. Where no party can make a majority, then coalition must be formed. As the sitting government, the Conseratives get first bite of the apple, and a chance to form government with the Liberal Democrats. The Liberal Democrats have stated they would form government with the 'largest party', this gives them wriggle room between largest vote share and largest seat share.
The next possible option for the Conservatives would include UKIP, but it is practically impossible to foresee a coalition including both Lib Dems and UKIP, and UKIP are yet to produce enough simulations where they hold any seats at all to even make a difference. Northern Ireland unionist support can be entirely ruled out in this day and age.
If the Conservatives can't make any coalition, then Labour get a chance to form one. Their first choice is likely to be the Lib Dems. However, if they can't then a new option has become a very real possibility. A "Tartan" Coalition that includes the SNP, either as a full partner or as providers of confidence and supply to a minority Government. This may, and quite likely would, also include the Lib Dems, and that could indicate a political problem with such a coalition. So the predicted possibility of a "Tartan" Coalition should be taken with a huge caveat.
If all coalition negotiations failed, or were impossible to form a majority from, then the largest party forms a minority government. They would then be expected to call new elections later in the year. This assumes however that the opposition parties would allow new elections to be called through the relevant portions of the Fixed-term Parliaments Act.
Theoretically, the opposition parties could force a minority government to last its term, but I doubt that would happen. It is possible that a government could propose a bill to amend the Fixed-term Parliaments Act as a confidence motion that if it failed would, by previous convention, trigger dissolution of parliament. Parliamentary advice on the subject notes that the declaration of a bill as a confidence motion has been untested under the Fixed-term Parliaments Act. I suspect this is a question the Speaker of the House would rather not have to answer.
*Following bug-fixes in the coalition logic and Scottish seats prediction that gave Labour a slight advantage in 'election tomorrow' predictions, and some runtime optimisations that should not significantly influence the results, a back history is being regenerated. This will be published once complete.
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