The UK is different from the US in it's legal system and regulatory agencies.
So here are some places you can try for help in the UK with PayPal problems:
(directly here: http://www.fsa.gov.uk/consumer/02_HOW/Complain/mn_Ihaveacomp.html to see their outline, and
more info here: http://www.fsa.gov.uk/consumer/02_HOW/Complain/ombudsman.html)
The Financial Ombudsman Service: http://www.financial-ombudsman.org.uk/
Small Claims Court in the UK here: http://www.fsa.gov.uk/consumer/02_HOW/Complain/mn_court.html
Also, the BBC: http://www.bbc.co.uk/watchdog/contact/computers.shtml
Suggest the BBC do an investigative story on PayPal: http://www.bbc.co.uk/feedback/