In the UK, specialist institutions have tended to find their financial position difficult to manage because they lack the size necessary to attract and make big investments and they are vulnerable to external changes in the funding environment and academic fashion due to their lack of a diverse subject base.
This is why we have seen specialist institutions like UMIST, Institute of Education, School of Pharmacy, SSEES and so on merge themselves into bigger universities, despite already being top institutions in their own fields. It's also one of the reasons for SOAS's struggles today. Even the LSE was only able to get to the point where it was able to start marketing itself as its own now-successful brand because the University of London, of which it was a part, had protected and propped it up for decades while it struggled along as one of the least financially viable constituent colleges of UoL.
If universities want to stay part of the mainstream HE sector and continue to receive government funding (rather than go down the route of the University of Law, for example, and become private specialist universities, which carries a lot of risks and has few examples of success in the UK despite being a successful model in other countries), which it appears they do, the way funding works means that bigger and more diverse makes the most financial sense in nearly all cases. Even Imperial has been diversifying its subject portfolio into the social sciences particularly, because this gives them more potential for growth based on their existing brand name and increases their proportion of low cost, high profit course in subjects like business and economics to supplement their finances.
Universities didn't stop offering HND/Cs as stand alone courses on a whim. They stopped offering them because they had declined massively in popularity and, relatedly, the sub-degree level qualification system was subjected to endless messing about by successive governments with changes in status (FE/HE), funding, progression routes, regulation and qualification types and requirements all coming at a time when employers were also stepping back from funding part-time and work-release courses due to the general economic climate. Universities don't want to engage with a system that offers so little stability and so little financial return, to the point where they end up losing money just from covering the administration costs of trying - why would they? Things might change with the recently announced cuts to the funding of Foundation degrees in England and Wales (that have extended far beyond their original purpose because they offered a security to universities that other sub and pre-degree qualifications do not), but yet another change to the sub-degree landscape is not exactly going to inspire confidence in universities (or anyone else) that investing in sub-degree provision is any more likely to ensure their institution's financial future than selling off their chemistry lab to buy Powerball tickets.
Whether there should be something like the colleges of technology scattered throughout the country offering shorter, more vocational courses and if or how these colleges should relate to the HE sector is a different question. At the moment that provision is a bit of a wild west of private providers and it's questionable how much it could scale up in its current form without needing increased subsidies from the government.