Simple answer: the then Strategic Rail Authority hated Liverpool. They saw it as "a declining city" in 2003. There was a deliberate policy of running down the train service to and from Liverpool, leading to withdrawal of direct services to Edinburgh (Virgin XC), South Wales (Arriva Trains Wales) and, of course, removal from the larger Virgin XC network with all remaining trains diverted to Manchester. The lower-quality Central Trains services between Liverpool and Stansted Airport were also pruned to no longer run east of Birmingham, with that leg given over to XC. The SRA also seriously considered truncating the Norwich - Liverpool service at Manchester, due to congestion in the south Manchester area. I'm genuinely not sure how the Liverpool to London hourly service survived in their plans(!) All this took place at a time when Liverpool was about to be voted European Capital of Culture and a growing re-emergence of the city as a genuine and leading tourist destination.
It's taken some 15 to 20 years for the rail operators to finally recognise this, with the development and re-introduction of more frequent inter-city services to new destinations: TPE to Scotland via two different routes; LNWR to Birmingham International, Coventry and Northampton; TfW to Chester and soon back into both North and South Wales; and Avanti's plans to run 2 trains per hour to London from 2022. Maybe even restoration of the Northern Connect service to Bradford via the Calder Valley too, although this is looking less and less likely as time goes on.
Unfortunately, I can't see XC or their successor giving up one of their 2 trains per hour to Manchester to give Liverpool back its direct XC services (or, for that matter, other places in North West England that aren't Manchester! Warrington, Wigan, Preston, Lancaster, Carlisle etc. all used to have long-distance services to the South Coast and South West). I can't see any easy solution to this really, unless regular portion working became a thing again.
At least when LNWR's new trains come into service, they should provide a better quality of accommodation than the 350/2s, although it would be nice to see a more limited-stop pattern on at least one of the half-hourly Liverpool - Birmingham - London services to give a more attractive and "Inter-city" feel to the service, whatever that actually means these days!