Lets not forget the context.
Total Govt Spending 2011- 2012 - £700 billion, give or take the odd billion.
Total Pension Payments 2011 - 2012 - £80 billion, give or take the odd billion
Total Winter Fuel Payments 2011 - 2011 - £2 billion or so, paid out to around 12 million recipients.
So - around 0.3% of total government spending.
Excess deaths during winter in 2007-2008 was around 38,000 elderly, mostly over 75.(prior to the introduction of the WFA)
Excess deaths during winter 2011- 2012 was around 24,0000 elderly, again mostly over 75.
Too many confounding factors to directly attribute the reduction in excess winter deaths directly to the WFA, but it will definitely have played a part, which is a good thing.
Studies have shown that when people are given a sum of money that is labelled, they will spend far more of that money on what it is intended for, so keeping it as a WFA is probably a good thing, from a behavioral point of view. If we just handed out a lump sum or included it as part of the pension, there is evidence to show that far less people would use the money for its intended purpose. So we should keep it as a labelled payment.
If as a country we are that desperate, that lacking in other areas of public expenditure to cut, and you really want to trim the budget for the WFA, make it a taxable benefit - at least 15% of the recipients of state pension have enough income to be paying tax - and increase the minimum age when the payment starts to 70.Again, studies show the majority of excess winter deaths occur in those folk over 75.