They can do that with people who will be teaching, since that is bringing funding in for the university. But they don't do it for Research Assistants, because once the funding for the project the Research Assistant is paid from (usually a fixed term grant of a 2-3 years) runs out, then the university would have no income to match the cost of the salary. As there may be hundreds or thousands of such salaries, this would result in a funding shortfall of something of the order of $100m a year (including overheads). And that is to say nothing of the expensive equipment such employees might need to continue their work.

Project centred research does not bring in income for universities on an ongoing basis, which is what the argument about core funding is all about. If more funding were core funding, not tied to a specific project, then it would be possible for universities to do the right thing and provide career paths for Research Assistants.

Please note: I'm not arguing that universities in the UK are doing the right thing. I used to work as a postdoc there and understand very well what the author of the Postdoc Myths list is talking about. I'm simply answering the question as to why universities can't just do the right thing.