The following text was received from easyjet today - 48 days after the original submission.....
"Where your flight is delayed for 5 hours or more, if you chose not to fly, we will give you a refund of the fare paid via the original method of payment (inclusive of all taxes and charges but exclusive of credit card fees if applicable) for the journey not used and for the journey already used where the flight no longer serves the purpose of the original travel plan. This refund can be claimed by contacting Customer Service on 0871 244 2366 (calls cost 10p per minute; calls from mobiles and other networks may cost more)."
Therefore, it would appear that Easyjet are not operating within the new EEC directive 261/2004 regarding compensation for delays.
This matter has now been escalated to office of Drector of European Commission of Energy and Transport in Brussels for their attention.
GengisK