Sorry to hear that bad news Steve. You definitely have cause to start a complaints procedure if they didn't give you any warning prior to this, and you had no idea they were dissatisfied with your work. Employees are well protected in the UK. Go to your local citizens advice as it is free and they can get you started with what needs to happen next.

Also, good luck getting on to the HND. Would the new fee prices effect you on an HND? If so how much would it likely cost? And what was the HND you are looking to take?