Thanks @ericsbrother for the advice. It's a tricky situation because we could cancel it and then it just turns up tomorrow in the post. I think if it doesn't arrive in another week's time we will go down the route of cancelling it and reporting it as lost. If we go down that route we will fully want the DVLA being held to account, however unlikely that is to happen. We would definitely try to get our local MP involved in that case.
<rant>
It is ridiculous that they can just strip foreign nationals of their original legal documents and not take any of the blame. I guess it's also ridiculous that we live in the 21st century and yet because we haven't got a bit of plastic it causes all sorts of problems.
</rant>