The problem with our rail networks is we do all the unprofitable things (rails, infrastructure, bailouts & subsidising the unpopular routes) & private business enjoys cherry picking all the profitable sections.
Really we should be off-setting the profitable sections against the unprofitable ones. If a nationalised industry runs at a loss, that can be fine - as currently if the entire sector (including the unprofitable ones) was put into private ownership it would be run at a loss.
We essentially have the worst of both worlds.
No, cross subsidizing bad business from good business is exactly the thing that should be avoided, because it ends up hurting those who are already in the worst situation: Poor people living in most expensive areas, where the living costs are already super high compared to their income!
It is much better to run the unprofitable rural business form tax payers pockets instead of taking money from everyone in London area by increasing the ticket price. Reason is actually quite simple and Labour of all parties should understand it.
Increase in ticket price is a regressive Lump-sum tax affecting everyone with the same cost-increase per month, hurting the poor & low income people most. £20 / month hike in monthly tube pass for bankers in City means nothing and since there are only few bankers compared to poor folks working in service industry, rich people end up paying only very small portion of this "tax" / increased cost.
Instead, when you recoup the cost of unprofitable public rail service from income tax, it actually means that only middle-class and well off people pay the increased cost, since low-income & poor are almost completely exempt of income tax. (Oh, and when the rail service doesn't have to subsidize unprofitable business, it probably makes more profit and ends up paying more corporate tax...)
Btw, same thing applies for almost all lump-sump priced (semi)public services. TV license & tuition payments & council tax etc. There are even countless welfare systems built just to fix issue caused by this stupidity of hitting poor people with lump-sum costs.
