Has John Swinney been handed a brimming bag of rubbish by Labour cuts?

That challenge just became more acute – with the decision by the Rachel Reeves to agree pay settlements for England which feature sundry 5.5 per cent deals. Scottish local authorities have offered the refuse collectors 3.2 per cent. Councils say they would need Holyrood help to offer more.

There had been vague hints that a deal might be done at 4 per cent. No longer. Scottish workers will want parity with those English deals.

In vain, Ministers point out that public sector pay is already higher in Scotland. That individual comparisons are not always precise.

John Swinney (Image: free)

Enter Ian Murray, the new Secretary of State for Scotland. An astute, experienced and moderate politician. Once the sole Scottish Labour figure in the Commons. Now surrounded by a squad. Mr Murray suggested that there would be more money flowing to Scotland as a consequence of the Chancellor’s statement. That cash, he proposed, might be used to settle the refuse dispute.

Now, I am certain that Mr Murray’s objectives were genuine. He wants to help his constituents in Edinburgh South. He wants to protect the Festival City from the squalor which attended the last strike.

Further, he wants to enhance pay for workers, in line with the approach pursued by Rachel Reeves. He wants to settle with unions – who, of course, have Labour links. Perhaps he feels he is helping Holyrood, in line with the consensual aims he set out on entering office.

Scottish Ministers, also pursuing a declared strategy of co-operation, bite their tongue. Not sure Mr Murray’s plan quite works.

For one thing, Scottish Ministers will not know the scope of their overall spending package until after the Chancellor has set out her full Budget on October 30. That means Shona Robison, Scotland’s Finance Secretary, will not know precisely how much she has to distribute until well into November. To avoid strikes, to pre-empt rubbish piling up in the capital and elsewhere, a deal has to be done with the refuse workers in the next fortnight.

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It is all very well to say that there will be extra cash for Scotland down the road. Right now, there are no details – and no possibility of details.

Mr Murray acknowledged that we did not have the calculations, the Barnett consequentials, at this stage. To enhance the offer to the refuse workers, Ms Robison and John Swinney would have to make a series of presumptions – without absolute certainty.

If you like, their position resembles that of the Chancellor before she studied the full, detailed accounts on entering 11 Downing Street. She told the Commons that she discovered a black hole of £22bn in those accounts – and tailored her plans accordingly.

That narrative is disputed by other parties – who say it was made plain during the election, by the Institute of Fiscal Studies and others, that cash problems would confront whichever party held power. Ms Reeves is adamant that the detailed picture is worse than the IFS forecast – which, she says, covered a full Parliamentary term. She says she is coping with an immediate crisis.

Either way, she has the facts now – and has acted accordingly by, for example, restricting the winter fuel allowance to those in receipt of pension credit.

I believe that contentious decision had three purposes. To save money. To convince political sceptics of the need for action. And to send a message to the financial markets that she was prepared to take tough decisions in pursuit of stability.

However, it also had consequences for the Scottish Government. After prolonged preparation, winter fuel payments are due to be devolved to Holyrood next month. To match that, insiders say they had expected a block grant transfer from the Treasury of £180m. Under the new, reduced scheme, that sum could be around £20m. Which, of course, adds to the financial conundrum facing Scottish Ministers.

Ian Murray (Image: free)

To repeat, they do not and cannot know their full budget total at this stage, despite talk of extra funding. But they do know that they start, potentially, £160m short on funding winter fuel payments. I understand this is provoking internal debate within the Scottish Government.

Those thinking fiscally say Holyrood should follow the UK example and only fund fuel payments for the lowest income pensioners.

Those thinking politically say: what sort of message does it send that energy-rich Scotland cannot afford to help all its elderly population with fuel costs? In passing, we might note that the Scottish Secretary drew attention to this issue when he said that Holyrood Ministers could choose universal fuel payments – or a pay deal with the refuse workers.

He has a point – although, of course, it is not as simple as that. There are broader choices to be made about funding programmes – and their relative importance in straitened times. The issue of pay will return at both Westminster and Holyrood. Scottish Government Ministers may stress their relative generosity thus far on public sector pay. The Chancellor will argue that public sector settlements are only catching up with private sector pay.

Meanwhile, having rewarded the junior hospital doctors, she now faces a form of “work to rule” by GPs. But there is a deeper question; that of economic growth. Mr Murray talks of GB Energy, of trade talks, of hope. But I still struggle to discern the precise policy path to stimulating revival. It might be said that the pay awards will bring a Keynesian uplift. But the Chancellor has also ordered departments to seek cuts. Real growth would come from investment and new business. Ditto at Holyrood, where economic growth is also the declared aim.

Truly, these are testing times – and not just over public sector pay.