astir
Read EU261/2004 and look at the remedies for cancelled flights - rescheduling is one of them. As far as I can see (unless there is something you have not declared) BA has unlawfully terminated your wife's contract.
Get your beloved to write a letter telling them this and giving them 7 days to provide a remedy, which will be her costs incurred, e.g the U2 fare and any other direct expenses - make sure to include the costs of any postage and stationery - send this letter by a traceable service.
If you have not heard anything by day 8, then get your beloved to issue proceedings against BA in the small claims court.
This appears to be clear breach of contract and you will wish to claim the £400, as well as all costs involved in pursuing BA and any other costs arising.
She may also be due compensation under EU261/2004 for denied boarding, worth looking at.
If the facts are as you say, don't mess about with the AUC, just sue.