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I just did a quick search and the market re number of jobs looks much the same as ever and the rates look to be a lot, lot higher than a year ago, certainly in my area. I think this doom and gloom is unfounded. Bearing in mind most people when in contract will be less likely to visit this and...
The main reason for going contracting is to make more money, sounds like you're just giving it away! You missed out on another role, you are now out of pocket and out of work, that's why you have a 2 week notice period to avoid such losses. I'd issue a claim against them via the small claims...