In a long-awaited speech, Clare Short, Labour's transport spokeswoman, finally set out the party's policy, which was presented by senior party sources as "realistic and achievable".
However, the policy falls well short of a firm commitment to renationalise Railtrack quickly, as was being demanded by the unions and the Left. Ms Short, speaking in Swindon, Berkshire, said that Railtrack would only be renationalised depending "on the availability of resources, and as priorities allow". She also failed to specify what percentage of Railtrack would be bought back - and the Government has yet to announce how much is to be sold, although it will be at least 51 per cent.
Gordon Brown, the shadow Chancellor, has clearly won the argument in preventing any firm commitment to renationalise, even though many Labour MPs argued that the party should not allow the shareholders of a privatised Railtrack to make profits out of public money. Currently, 94 per cent of Railtrack's pounds 2bn-per-year income comes from track access charges, which are paid by the train-operating companies who receive pounds 1.8bn a year in subsidy.
Despite Mr Brown's victory, the Tories seized on the speech, saying that it was a return to old-style Labour pro-nationalisation values. Brian Mawhinney, the Conservative Party chairman said: "This is just nationalisation; `New Labour' 50 years old - driven by trade unions and John Prescott [deputy leader] to nationalise."
However, Michael Heseltine, the Deputy Prime Minister, took a different tack as he said the plans were "vacuous" and proved that Labour was not fit to govern because they failed to answer key questions about the future of the industry.
It is clear from Ms Short's speech that Labour in government would do little to change the complex structure of privatisation set out by the Railways Act 1993. However, she said that Labour intends, by legislation, to give enhanced powers to the Rail Regulator to control the industry and get value from the industry's pounds 2bn-worth of public subsidy.
In a mischievous part of the Act, presumably aimed at future Labour administrations, the Government specified that from the beginning of 1997 the regulator would no longer be subject to guidance from ministers and Ms Short has clearly committed Labour to ensuring that the regulator would have enhanced powers.
Ms Short wants the regulator to impose "fair access charges", and this may result in a reduction of Railtrack's profitability. While this increases somewhat the political risk and may deter some individual investors from buying Railtrack shares which go on sale in early May, the City appears satisfied that Railtrack will be a good investment. One City source said: "Most people were worried that Labour's statement would have been something more material."
The City was particularly pleased that Ms Short said: "there is no question of existing contacts being cancelled against the wishes of the parties to them".
One firm commitment is that Labour will rein back on the profits which Railtrack can make from property development. Currently, Railtrack can keep 75 per cent of the profits, but Labour intends that all proceeds should be used to keep fares down.