My current flight school seems to think I need to pay for dual hours even when I am solo, as I am a student. This seems a lot like typical aviation school bull to me, but is this something to do with what the CAA has stipulated and is just the way things are done?
Your school is entitled to think what it likes; it has nothing to do with the CAA. The school is providing you with a Service in teaching you to fly and ensuring that it is done safely. Whilst solo, you are the responsibility of the Instructor who authorises the flight; he/she has a duty of care to you and could be prosecuted for endangerment if not executed properly. The same instructor probably provides you with ground training for which no fee is charged; perhaps it is time we joined the real world and charged for all services provided!
To solo hire an aeroplane you need to hold a licence, then you will get the solo rate, because no instructor is involved. If you don't like the rates that you pay for an aeroplane instructor, I suggest you look at what Microlight instructors charge!
I haven't ever paid for dual when solo before in my training so seems a little strange
Then quite possibly the school does not pay the instructor and maybe you were not receiving any supervision either!