Agree, it should be, but the fact that XC for so long (well before Covid and the current contractual situation) appear to have struggled to make any case for lengthening services suggests it may not be quite that straightforward.
Isn't the problem that the cost of lengthening services goes far beyond additional rolling stock, also involving depot alterations, more staff, different timetabling, platform capacity, changes to the services of other operators and other hidden factors, not just lease cost and some more diesel?
XC has always been a challenge. It has always been the Cinderella of the long-distance network, even back in British Rail days it was always the last to receive upgraded stock. The reason for this is simple, and always has been: it doesn't go to London.
We had one big influx of investment, with the 220/221s and Operation Princess. But even then the SRA, as was, meddled and cut corners: Virgin weren't allowed to keep the HSTs they'd intended to refurbish and retain. Clearly this investment created as many problems as it solved, the 220/221s have always been massively overcrowded, and they've always been too heavy and too over-powered to be of use on more regional routes.
I think some of it is Arriva being Arriva too. They spent a fortune removing the on-board buffet to provide extra seating, and the changes provided precisely zero extra seats. They got permission to use a small fleet of HSTs and then decided to leave said small fleet of HSTs parked up for most of the week. No wonder the DfT finally decided to get rid; if even the TOC doesn't want to use the stock, why would the DfT see it differently?
The 220/221s were clearly a mistake in hindsight: too small and too heavy. But we're stuck with them until they're life expired now. The reason for this comes back, as it often does, again to the fact that XC don't serve London. Other TOCs would have been allowed to recover from the mistake long ago- SWR were allowed to replace their perfectly good 707s- but not XC. XC should have been allowed to obtain some IETs, which would have been perfect, given the existing IET infrastructure at both ends of the XC network. But that ship, too, has now sailed.