Digger, have a look at this.
http://www.direct.gov.uk/en/Employment/Redunda ncyAndLeavingYourJob/DG_10026693
The long and the short of it is that your employer can't do this and not pay you unless there is something to cover it in your contract, or your industry has a general agreement - in spite of my name I don't know this - phone CAB and see what they know.
As you suspect, I reckon your employer is trying to avoid forking out redundancy payments - get folks to clear off.
(unless clauses in your contract to agree it), your contract cannot be changed without giving you your notice period of the change - so changing it at 7 days notice is a no,no - should be giving you the number of weeks that you have been employed there in full years - up to a maximum of 12 weeks notice.