Your whole argument is now totally confused by a Political argument.
If your argument was sutainable then even the EU which is predominantly a Socialist experiment would have required Railways to remain under Government control. They do not. Their whole policy is based upon a different structure.
The situation where we are with regards to subsidy is testament to 13 years of Labour mismanagement, where for example the demise of GNER for sheer cynical Political reasons, was given greater priority than setting out a properstructure and manging out those TOCs who failed, but of course Political patronage was well ensconced during Labour's time in power.
Which would get your priority for investment when it came to a clash for funding- a hospital or the Railway
Ah yes, the infamous socialist experiment that the Tories clamoured to join.
If you actually read the EUs regulations you find that they aren't socialist in the slightest, and they don't force people to give contracts to the lowest bidder either (it says
most economically advantageous) and demand deregulation of most industries, especially utilities.
Regulation and so on is required if meaningful passenger railway operations are to be retained, currently only one TOC does not benefit from a net public subsidy (FCC) and even then they have trains which run at a profit and ones that run at a loss. (you can say goodbye to trains on Weekends or during off peak periods in commuter-land)
Without subsidy and government control the railway network would die a rapid and messy death and we would be without a significant long distance surface public transport infrastructure.
If something is receiving public funding it should be under public control and preferably public ownership to prevent the exploitation of the public the purse that has become the norm.
And as my semi-independent railway would be able to issue bonds in its own name and since we would likely be able to ignore the idiotic, arbitrary and neo-liberal overall government borrowing limits set by the EU (that do not distinguish between borrowing for infrastructure investment and borrowing to finance welfare payments - hence the idiocy of PFI).
We could invest as much as would required in infrastructure there would be no overall limit on capital funding, only on day-to-day overall operational subsidy and interest service.