I've spent some time over the last couple of years in Peebles. Speaking to a hotel manager he said the railway has pushed up house prices as Edinburgh is now a much easier commute. A problem for a business which needs to employ lots of people in lower salary roles in an area with a low population density.
Any service or line that is going to make a profit it would already exist by now.
The value that passenger railways generate is mostly turned into land values. The only way to make a passenger railway profitable is if the railway company can benefit from these increases in land values. Various successful suburban commuter railways worked because the railway company developed the land for housing and therefore created the demand for season ticket holders who would guarantee future revenue as well.
It's fine for the railway itself to not make money if we've got tax systems that mean the increase in land values get collected appropriately. We don't. The benefits of the railway largely go to the people who own land (including existing housing) because their land is more desirable and therefore worth more. In a working system, we would therefore tax them more. Yes, this includes even people like pensioners who just happen to own a house and who don't actually use the railway. If your house goes up in value by £50k because of the railway, then it is madness that the state can't get back something like £10k in taxes as a result.
The only property value based tax we have is LBTT but that excludes lower-valued properties (thereby excluding all of the cases where a £100k house ends up worth £130k) and is only collected once when a property is sold, which may be decades away. Our council tax system means valuations are compressed into bands, and the lack of revaluation since 1991 means no one would have to pay more either. The Borders Railway did not exist in 1991 therefore you do not have to pay based on it in 2026. The only exception might be if you have a new house with a valuation post-railway reopening, but this is still compressed by the band system.
Given that the UK appears to be in an economic death spiral with collapsing public investment, I don't think it's credible for us to go on like this. If we don't sort out the connection between infrastructure investment and property taxes, then we just won't have any infrastructure investment. Even the private sector isn't going to be interested. It's also not credible to keep plans for infrastructure investment separate to development and redevelopment. If an area wants a shiny new railway or metro line, then it is going to need to build a lot more housing. If house prices are going up then it's normally a sign that there's just not enough housing in an area. If you've got a railway that needs more passengers, you don't have a reason to say no to more housing along it.