State aid is complicated. You can argue that having in work benefits is a form of state aid to many low paying industries. Many regional grants end up implicitly helping a large local industry.
Clearly direct subsidies are wrong, but the state can get involved with many services perfectly legitimately. It’s just a matter of doing it right.
In much of western Europe, utilities are part owned by the local government and part quoted. It’s a great system - they have to make a profit for the shareholders, but are restrained from being massive cunts by the state, who also shares when they make super profits.
I don’t know what Labour’s plan is for rail and utilities, but it is possible to retain the entrepreneurial benefits of private ownership while having significant government ownership and control, without falling foul of EU state aid laws.