You have to pay £20ish to put a small case in the overhead locker (this was free pre-Covid)
Nothing to do with Covid, it started being a thing around 2016. Everybody used to bring wheelie cases on board before that, and it caused delays and unnecessary chaos. People would refuse to put them in the hold after the lockers were full, or to place them anywhere that wasn't directly above their heads. The boarding process was a true mess. They first separated it into priority / non-priority boarding, and then realised they could also charge for the priority option so that's what they're doing now.
90% of low cost airlines do this - Ryanair, easyJet, Norwegian, Eurowings, Wizz Air, Vueling... and a long list of etc. Even American companies such as Spirit, or even the main ones on shorter segments, have started charging for it.
Why do BA and other flag carriers allow a wheelie case on board for free? Because a very large percentage of passengers on those flights are on a ticket that includes checked luggage so they put it in the hold, or connecting to/from a long-haul flight which usually also includes checked luggage. Even if they did have cabin suitcases, these are almost always checked in for free at the counter, because the airlines prioritise a quick and efficient boarding process and would rather carry extra bags in the hold without charging the passengers for it. I fly Lufthansa, Swiss and Austrian very often and since Covid I've never once carried my cabin suitcase on board. I'm going to the counter anyway for them to check Covid docs, so I may as well check the suitcase in and avoid carrying it myself during layovers.
To be completely honest, low-cost flights were always going to be unsustainable in the long term. I fly several times a month and during the last few years have gotten used to £10 or £15 return fares on cheap airlines. Filling a plane with such cheap tickets isn't enough to even cover costs. These businesses are now adopting the model of - our flights are still cheap, but we're going to start charging you for all the 'extras' otherwise we won't be able to afford to run the flights.
Of course the company owners etc are still making shitloads of money and not even hiding it, but you can't forget that even 20 years ago, flying for so little money was not a thing. Modest, 'normal' families had little to no chance at going on a plane. Now (or rather, in recent years and up until now) you can go abroad for £10, and there are dozens of routes to choose from. The price you pay is that you can't take the kitchen sink with you on board, nor do you get a free bottle of water during the flight. If you ask me, that's a small price.