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The looming spending cuts are going to require some deft U-turning on past commitments at Holyrood, and at last there are signs that the preparatory mirror check and signal are now being engaged in advance of political manoeuvring.

On funding universities, for instance, note what's not being said when student tuition fees are firmly ruled out. That doesn't mean graduates shouldn't pay, or if not for tuition, that there shouldn't be more of a contribution to maintenance costs.

But one totem of SNP and Labour positioning that remains a hard one for retreat is the public ownership of Scottish Water.

It comes up on most occasions that an independent view is taken of Holyrood. The Howat Report, published in 2007 and examining how Scottish public spending could be more efficient, recommended as much. It was promptly shelved.

Febrile bickering

It's a safe bet that Crawford Beveridge's independent review of the budget, commissioned by Scottish government ministers, will return to the subject.

His report, due for publication next week, is intended to provide cover for quite a few difficult decisions ahead. And there are those across the parties who are glad the parliamentary recess means it won't be launched into febrile bickering at First Minister's Questions, but can be given a more considered response.

A week ahead of the pronouncements by the former Scottish Enterprise chief executive and his fellow panel members, they in turn have been given political cover by the Scottish Futures Trust.

This body was set up by the SNP administration, under the chairmanship of Sir Angus Grossart, to think of ways of procuring public investment without the problems associated with the Private Finance Initiative and its successors.

Its low level of delivery has been, let's just say... 'noted' by the SNP's opponents. But this week, the SFT has brought forward a significant new report on Scottish Water.

It doesn't include any consideration of privatisation, because that water remains too hot even for contemplation at Holyrood.

Public benefits

Instead, it takes on the idea of mutualisation, favoured by Tories and Lib Dems. And it finds the idea wanting, not least because true mutual status would require all of us, as equal shareholders, to have an equal say in governance. That's not seen as practical or viable.

But there is another option, which comes close to mutual status. It's called a Public Benefit Corporation. Under this, Scottish ministers would hand over their 100% shareholding in Scottish Water to "members" - a cross-section of those with an interest in the industry, and without being political representatives, numbering around 70.

While ministers could express the public interest through their control of regulation, the company's members would hold the board of directors to account on behalf of customers. And any surpluses would be recycled through bills at a flat rate of distribution.

The model was used when Welsh Water came close to financial collapse. And the fact that it started from a very bad place is one reason it's seen as problematic. Welsh Water has been slow to distribute surpluses, and is still heavily burdened with debt.

More agreeable examples of the legal entity known as a Company Limited by Guarantee include Network Rail, many housing associations, the company controlling Northern Ireland's gas infrastructure, the Big Issue, Nominet UK, which registers internet domains, Oxfam and the England and Wales cricket board.

Treasury clawback

In contrast with Welsh Water, the SFT argues Scottish Water would start from a position of strength, and could choose to increase its debt gearing. It would, under this plan, provide Scottish ministers with a pay-off of debt amounting to at least £2.75bn (unless Her Majesty's Treasury claimed that money as its own, which could be a significant stumbling block).

It would also relieve Holyrood's finances of having to provide an annual allocation of capital, estimated at about £140m for the average of the next five years. Instead, it would raise its finance on the money markets, at a price reckoned by KPMG to be "broadly equivalent" to current capital cost (a factor that has been open to dispute from opponents of mutual or private status).

Scottish Water's share of the Scottish government's capital programme is already about 5%. And facing sharp cuts in capital budget flowing from the cuts at Westminster, the same amount of money could push its share up to 10%.

That's at a time when there's a long list of significant capital spending commitments, starting with Glasgow's Southern General, continuing past Aberdeen on a new western relief road, and on towards the new Forth crossing.

Reasonably well-performing

SFT tries not to take sides in the debate, but its report leaves little doubt that it thinks ministers would be bonkers to continue allocating ultra-scarce capital to Scottish Water, when it is well placed to look after itself as a Public Benefit Corporation.

The argument most often deployed against this is that the banks would soon take control through such a company's debt financing. And it's acknowledged there's a risk of that, depending how much the company gears its borrowing and investment programme.

A 55% gearing, as at present (the level of debt carried by the company as a proportion of its total value) would probably give Scottish Water an A credit rating, it is argued. Putting it over 70% would be "operable" but would lead to significant leverage from lenders. Even 80% is possible.

In all this, SFT sees Scottish Water as "a reasonably well-performing business". And that's part of the problem.

Inside the company, they're unable to say publicly that it could be a much better performing business if freed from the constraints of public ownership. Their shareholder doesn't want to hear that from them.

It has proven it can deliver big efficiency improvements over quite a short time, as well as a gigantic investment programme. So it could expand its empire into other operations or even acquisitions. With the reach of a big utility, it could, for instance, compete with councils for rubbish collections. Its extensive property portfolio carries potential for renewable energy, including wind farms - if only it could access the necessary capital for ininvestment.

But because it proves a point about public ownership - that it can work and perform "reasonably" well - it's an example its political owners don't want to give up.

In any case, they're left with the political legacy of a referendum in Strathclyde from 16 years ago. The then regional council used a huge public majority to kill off Tory government hopes that Scotland's various water authorities could be floated in the same way they had been privatised in England and Wales.

By coincidence, the returning officer in that vote was Strathclyde's top official, Neil McIntosh, since knighted and one of the other two panellists sitting with Crawford Beveridge.

Viewing the issue in that referendum mirror, the rhetoric used then of Scotland's water being a God-given birthright for all Jock Tamson's Bairns makes a U-turn on Scottish Water a difficult manoeuvre.