I think the shed was in use until at least around 1960 - the local trains in particular were steam-hauled until DMUs took over in January 1960. Longer distance trains, both passenger and goods, remained steam-hauled for some while thereafter. In the early 1970s I can recall seeing diesel locos standing outside the shed - although I don't think the shed was in use by then.
I assume that NR don't want to sell off the land and can't be bothered to go to the expense of knocking the shed down.
For comparison, the engine shed at St Albans City station closed in 1960 and was demolished in 1965. The area was used for car parking until about ten years ago when a new multi-storey carpark was built roughly where the engine shed had once stood, together with new flats.