Yes Minister only launched in the early 80s, by then the number of GS's was about the same as it is now, hugely down from its 1960s peak. It's certainly true that GS's used to get more funding per pupil, which isn't true of today's 'grammar schools', though I'm not sure what the implication of the move towards comprehensives was for overall funding. I should think that today's state school system, with most kids staying on till 18, so many classroom assistants etc in primaries and SEN specialists etc, & half decent buildings etc for most, is in aggregate an awful lot more expensive per head the 1960s system.
Anyway, back to OP's question, why have so many successive governments gone along with keeping the overall number of GS's very low? I suppose a practical reason is that they were on balance unpopular with voters, but really I suppose the main reason is that the mid 80s move to GCSEs, i.e. towards a united qualification for everyone, cut the case for the GS/modern school system off at the knees.
The original postwar tripartite system [of grammar schools, technical schools (remember them? me neither) didn't promote segregation for segregation's sake. The whole point of the tripartite system was that the grammars were set up to produce arm kids with a set of relatively demanding academic 16+ qualifications [O levels] and the moderns set up to arm kids with either no or soft [CSE] academic qualifications. Very different qualifications meant very different syllabuses meant very different schools. O levels were, at least initially, so difficult as not to be suitable for most [not all] kids.
GCSEs are completely different, with the overall bar set low enough so that relatively high grades are attainable for most [not all] kids. The remaining grammars now promote segregation for segregation's sake. Adding more grammars but keeping GCSEs in their current form would be a bringing back a small part of the old system in a really weird way.