Why did we never manage to create the equivalent of the German Technische Hochschulen — institutions focused on the applied sciences which rapidly became every bit as prestigious as most of the older traditional universities whilst remained committed to that focus ?
Partly because it costs half as much to provide a degree to an arts student and the fees are the same, so there is very little benefit in a market-led system to teaching lots of science. Partly also because we devalued the word university by applying it to dozens of second-tier institutions, making name recognition harder for the science-oriented universities we did create.
Places like Herriott Watt and Bradford are good science-oriented universities, but name-recognition-wise they don't stick out any more than Napier or even Worcester. When there are already dozens of well-established high-quality traditional universities often with hundreds of years of name recognition behind them it's difficult to stand out from the crowd.
I think the basic problem we have though is that we're actually training too many people in STEM degrees, probably in the same proportion as we are putting too many people through arts degrees.
We just can't get more than 25% of the population up to an education level in STEM where they were all doing valuable degree-level work that's competitive on the world stage, even if we had everything else in place to actually make those jobs happen. If they aren't going to do that then we're spending a wild amount of (their) money on being wrongly prepared them for less prestigious worse paid jobs.
If we're forcing students to waste their money on pointless degrees, then it seems unfair to force them to do a science course they may be bad at and hate rather than studying what they want.
I'd also add that we are competitive on the world stage and make a lot of money from arts-oriented specialisms, so in practice forcing people into STEM is quite likely counter-productive to the economy.