Well at least it sounds like they are starting the process to look at what alternatives they will offer, even if they have acted a little underhand in the run up to that.
Of course they are not the only airline to do that. Does feel like it will one day be the kind of thing challenged in the courts when someone takes a refund believing it is their only option.
As stated by others, UK law is very clear:
If you experience issues with your flight, such as a delay or cancellation, or you are denied boarding (that is, the flight departs but you are prevented from flying despite making it to the departure gate in good time), airlines must provide you with information about your rights with regard to assistance, refunds and compensation.
https://www.gov.uk/government/public...ncelled-rights