Is it because the crossing is ungated?
If I recall correctly, I
think, the issue is that it's ungated, and the house on the corner of the crossing means there is very poor visibility for both trains and road users.
My experience is of trains stopping at the station and then a long slow crawl until the cab clears the crossing, so I come back to the time spent which could instead be used for resilance or getting trains back to Oxenholme for better connections. In previous timetables there have been trains not stopping at Staveley or Burneside which would also benefit. Ultimately a passing loop at Burneside and two trains will be needed.
It feels psychologically bad as a passenger, but I would imagine the delay is a minute at most on services that stop at Burneside. And on the current timetable, almost every train stops at Burneside - there are only a few a day that don't (I know there used to be more but it seems no longer).
The line sees an approximately hourly service, and the end-to-end journey time is about 20 minutes, which already leaves a lot of recovery time. Apart from the small number of trains a day that go beyond Oxenholme, the line works pretty much as an isolated entity with virtually no interaction with the rest of the rail network - hence the risk of substantial delays is relatively small. In my experience, the line is pretty reliable for punctuality - so the minute or so that sorting out the level crossing would give you is unlikely to change much in that regard. I would suspect that's why there doesn't seem to be any official interest in trying to raise the speed limit there. Lots of expense for relatively little benefit.