When deciding how to tackle rails current funding shortfall the government not only has to keep one eye on the present but also the other eye on the future which for political reasons I am sure they will.
Despite its problems such as the present lack of capacity and adequate rolling stock I think rail still has a very bright future.
There is one black cloud which since the First World War creeps over the horizon the cloud is call political dogma, some Governments make the railways suffer at the hands of dogma more than others, the dogma of this particular Government is to reduce costs through de-centralisation that way market forces will drive the demand. The problem with politicians is they will mess things up blame it on the will of the people write their memoirs making a personal fortune in the process and then say the decision was right at the time but the economy is different now.
Do not trust the politicians or "consultants" employed by them to make the right decision because they are slaves to dogma