Seems sensible. Its pretty obvious what it is when it appears on your statement or Online account so the letter seems mainly unecessary. Can't remember whether there is also a separate letter for the £10 Christmas 'Bonus'
"Without the money wasted on letters there could be a little more available for those that genuinely need the allowance."
I think the letters are needed for clarity. Large numbers of recipients do not have internet access, and do not check their bank accounts between written statements. They benefit from a written notification.