The thing is the one city in the UK that was always going to continue to grow and prosper was London, and yet we decided to cut capacity on a line that feeds it! This should have been obvious to even the thickest of civil servants that people would always want to travel to London!
I understand that BR was under huge pressure to keep costs to a minimum but now decades later we are paying for those mistakes. Short sightedness has crippled this country for far too long. Any other country in northern Europe would have simply extended the railway boundaries.
The thing is that this simply wasn't the case. Read a few issues of, say, Modern Railways from the 70s and 80s and you will see that passenger traffic into central London was slowly declining. As late as 1983/4 services were being shortened or taken out of the timetable in the south east as there was insufficient custom to require them. Closure notices for all services into Marylebone were posted. Successive governments set very challenging financing limits (and incidentally, not very challenging performance targets).
So, when infrastructure that is not required, and with no realistic prospect of being used, is due for renewal and there is no cash, you don't replace it!
As it turns out, a small proportion of what was taken out 30/40 years ago is now needed again. By now it would have been due for renewal again. So the railway (indeed UK plc) has saved a whole life cycle cost.
Yes there are few examples of where removing capacity has increased the cost of putting it back - the OLE headspan masts between Huntingdon and Connington being a good example. However there are dozens of other places where infrastructure has been retained or built when it is not needed.
All this shows is that predicting the future 30 years in advance (let alone 10) is an inexact science, and we shouldn't be surprised at that.