WHEN Nicola Sturgeon emerged from her most recent meeting with David Cameron, she raised hopes that a deal over Holyrood's new powers was within reach.

"We’re looking for a Valentine’s Day deal," she declared.

It certainly had a ring to it. There may be no love lost between the First Minister and the Prime Minister but their two governments, at least, seemed finally to be getting close on the "fiscal framework," the fiendishly complicated financial arrangements behind the Scotland Bill.

That was two months ago.

Since then, the talks have remained deadlocked.

After two recent rounds of talks at the Treasury, John Swinney, the Finance Secretary, says there is still a considerable gulf between the two sides on the key question of how to reduce Scotland's annual grant from Westminster when Holyrood takes control of raising income tax.

The signs look worse than at any stage since the negotiations began early last year.

A pledge by both parties not to give a running commentary on the talks - a wise convention when it comes to delicate negotiation - has broken down.

The dispute is spilling out into the public arena, an indication the two sides want to get their excuses in first, in case the previously unthinkable happens and the talks end in failure.

Yet the Scottish and UK governments are adamant they want a deal and it is in Scotland's interests that they achieve one.

The new powers would give Holyrood over some 40 per cent of the tax raised in Scotland, not only making MSPs more accountable for the money they spend but providing an opportunity to do things differently from the UK Government.

The Scotland Bill would also devolve a £2.5billion welfare budget and give ministers the power to top up UK-wide benefits.

The new powers are not a panacea but they are worth fighting for.

The UK Government, backed by Labour and the Labour Dems, promised them in the wake of the independence referendum and the SNP, while arguing they do not go far enough, insist they be transferred.

It will not be easy to break the impasse.

John Swinney is right to say the Scotland Bill cannot happen at any price. He is right to resist a deal that would leave Scotland billions of pounds out of pocket as a result of demographic factors largely beyond its control.

For its part, the Treasury is refusing to back a deal it believes would be unfair on English taxpayers.

There is a lot of talking still to be done. It makes sense, therefore, to maximise the time available, as David Mundell, the Scottish Secretary said yesterday.

Mr Swinney has set a deadline of February 12 to allow for a Valentine's Day deal.

Yet he shouldn't jilt Greg Hands, the Chief Secretary to the Treasury, if no agreement is reached by then.

A later deal could still be scrutinised properly by MSPs in time for them to approve the Scotland Bill by March 23, the final day of business at Holyrood before it goes into recess for the election campaign.

Time is running out for both governments if the new powers are to avoid serious delay. But they should keep talking as long as they can.