"A side on which the airlines depend for their future supply of pilots"
Not if they can help it much longer they won't, hence the new ICAO multi-crew licence which will be with us very shortly, and is mostly sim based. A guaranteed supply of fresh faced first officers who will never have had to suffer the indignity of flying an aeroplane.
The airlines know that GA doesn't feature in their future, the CAA know it, so why on earth would the CAA bother defending it?