You would probably be better off using a polyisocyanurate foam such as Kingspan or Celotex fitted in studs and then plasterboard using standard plasterboard. This should have a better insulating effect for a given thickness and will make quite a difference to the heat loss.
The vent could have been put in because what is now the WC was once a pantry, or perhaps to provide air for an open flued gas water heater or some such. If there is still an open flued boiler, then you need to maintain an air supply of a certain size according to the boiler capacity - details are in the Building Regulations. If it were providing ventilation under a wooden floor then it also ought to stay. Otherwise, I don't see that it would be necessary to retain it as is. Perhaps replacing with an extractor fan would be an appropriate solution.
.andy
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