Doesn't that depend on where the demand goes instead? If it reduces overall travel but maintains economic activity, it may be fine to price off demand. If it increases car travel, that is more of a problem.
It would seem that one particular advantage to the Treasury of centralising control is to try and maximise revenue and reduce subsidy.
It's almost certain that everyone who is priced off the railways ends up using roads.
However the more we switch to rail the less travel overall which is likely to be made as you see the true cost to you of each trip.
If you knew that your car was costing £5.50 a day (annual cost of £2,000, which Kwik Fit have identified as the annual cost of car ownership excluding the purchase costs, of you include their figures for car purchase this rises to £12.50 a day), even when it's not being used, then people may not be so keen to own multiple cars, especially when many second cars may not get used much over a weekend and a fairly few miles each weekday, even more so if it's mostly used for getting to/from school.
However in reducing use, then there's a good chance that some travel would switch to rail.