Just think of it on terms of a State University in the US.
If you are from New York, you would have to pay out-of-state fees if you went to a state school in PA, even if you moved to the state for your courses.
This is because the state subsidizes the residents tuition with, in theory, taxes paid for by you and/or your parents.
Same here. The UK fees are subsidized by the taxpayers. If you are from out of the country, presumably you & your family have not been paying into the tax system long enough (if at all) to derive the benefit.
I would love to go to grad school here so I understand your distress, but I think their reasoning is pretty straightforward here.