The "European Capital Culture of Europe" is like the "European Green Capital of Europe". It's an award from the Commission putting an EU city in the spotlight for a year if they put some effort in promoting culture in general, or public transports, green areas and sustainable energy in the case of green capitals. There is absolutely no point in spending part of the EU budget for a city in the UK in 2023 if they are leaving in 2019.
I understand the disappointment but cities in non-EU member states are not allowed to bid. It makes sense not to pick a city in the UK as they will have been out of the EU for 4 years by then.