The future of Scottish Water has come into play as part of the Budget negotiations at Holyrood.

Labour has opened the door on talks with other parties about making it into a mutual company, removing it from public ownership and control by ministers.

It would join both Liberal Democrats and Conservatives, who were arguing before the May election that around £180m in capital subsidy could be released for spending on other priorities if it were freed up to borrow from the private capital markets.

The new political attraction of mutualising Scottish Water flows from last week's Budget.

With tight spending over the next three years, opposition parties are only able to propose changes to the priorities set out by Finance Secretary John Swinney if they also propose where equal amounts of spending should be cut. The Scottish National Party is against such a move to mutual status, which would remove ministerial control and hand it to customers of its water and sewerage services, while also giving financiers some control through its capital borrowing.

"That's something we've ruled out for this Parliament," said a spokesman.

However, the Finance Secretary faces pressure from the combined forces of the three main opposition parties, who can form a majority between them, now that Labour has said it is open to discussions with the others on how their alternative priorities can be funded. At the weekend, LibDem leader Nicol Stephen raised Scottish Water as the best way to fund spending priorities.

Labour's manifesto last May left it deliberately vague how it would handle the future of Scottish Water.

Public services spokesman Andy Kerr is now conspicuous for his refusal to endorse continued public ownership as the best way to run it, and a spokesman only said that the party is open to the idea in discussions with other parties.

The SNP argued that the complexity of a change of status from public ownership to mutual company would only release savings to the Holyrood Budget in the third year of the next spending round.

A Scottish Government source commented: "It is astonishing that parties which have been in government could make such a suggestion in relation to the Budget, as it shows a worrying ignorance of the budgetary and legislative process. Mutualising water would require separate legislation and a complete restructuring of the company, with no realistic prospect of a single penny being released during the coming spending period."

He went on: "One week on, none of the opposition parties have credibly answered the question of where the cuts would fall if they want to spend more in another area.

"They can't get away with this obfuscation - would it be health, schools, the central heating programme, or free personal care? Responsible opposition requires a hard answer to that hard question."

Over the past few days, the three main opposition parties have been setting out areas of the Budget where they think more money should be allocated.

Tories have said police and drugs rehabilitation should be given more resource, for the LibDems it should be for universities, while Labour yesterday reinforced its calls for skills training and modern apprenticeships to be given a higher priority.

That raises the problem for them of whether they can agree a strategy to pressurise SNP ministers into amending the Budget. Only ministers can propose amendments, though committees can put strong pressure on them to do so.

Labour also complained yesterday that the Scottish Government has failed to give MSPs sufficient detail on spending plans for next year, and the lack of information could lead to delays in scrutinising and passing the Budget Bill.

At the Finance Committee yesterday, Mr Swinney got approval for an amendment to this year's Budget which sees more than £1bn of additional funding for public sector pensions flowing through Holyrood budgets from the Treasury in London.