Sorry if my freeloading comment offended, but ultimately it is about passengers who pay cash for their tickets, and those who pay significantly less by using avios/vouchers.
BA reducing the cabin size will focus their attention on those who pay cash. The freed up space can then be used to put more Club/WTP/WT seats in. Overall number of seats goes up, hence better bottom line (and “better” Club/WTP/WT redemption availability).
I wouldn’t hold my breath to see any of this additional revenue going towards improvements of the F hard product though. 1 toilet for 8 F seats is a pretty clear indication that BA isn’t going to throw money at F...