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I can only imagine what you're having to go through, it's simply terrible. Do ring all government agencies that concern your case - I'm not familiar with the British ones.
There're aren't any for a situation like this!!
<sarcasm> It's part of what makes the UK great </sarcasm>
Well as you all know I'm speaking from the Third World here - but I can think of two or maybe three 'trading standards' government bodies that could help in a case like Nelson's over here. Some will just help you with the process of starting legal action, but that's a help in any case! Which is absolutely not equivalent to saying that the case would be fairly considered and judged.
Anyways, in the matter of courtesy cars: if VW assistance, or the VW dealer, advertised or implied to you in any way, anywhere that a replacement/courtesy car is available, then it must be, full stop. When they advertised this there was no mention of age limits, and VW or its dealers are certainly aware of the fact that any person over 17 (I think, or maybe 18?) can be licensed to drive a car in the UK.
So there, if they say there are courtesy cars for customers, if they didn't mention any age limits, and you need one (regardless of your age as long as you're old enough to drive), they're incurring in criminal activity if they don't give you a courtesy car (fraud). It's as simple as that, and bringing this up to a manager in way that other (and potential) customers might hear should work.
If this is stopping you from getting to work, as I said before, make them bleed - make them pay taxis or whatever. If they still refuse or tell you to get a bus or train, call the Police.
As for your mechanical problems, list them and send a registered letter of complaint to VW UK and to VAG in Germany. Also, there must be a way to send this sort of complaint oficially, though the judiciary system (to force someone accountable for this within the company to sign for its receipt). Once they are aware of your problems, and if they don't do anything (or do too little) about it, ask for a replacement car under the terms of UK or EU law. May take a while, but eventually they'd have to solve your problem.
Also, write to motoring and consumer magazines about it, some mags and newspapers have 'consumer's issues' sections where they try to contact the company for you and act as a mediator (this happens in Brazil, I don't know how this works in the UK).
Man, if people can have their problems solved in a messed up country like mine, in the UK it has to be easier!
P.S.: You have to go there and talk to them in person. Complaining over the phone will get your case registered. Ask for a 'register number' or something for your complaint, as proof that it's been noted in case the authority needs to verify that you've contacted VW and tried to solve things with them prior to involving the govnt. body or taking legal action.
I worked in a call center like this once (for my local phone company), and I can tell you that complaining to the person in that phone line will do you no good - they couldn't care less about your problem and besides all they can do is take a note and foward it to someone responsible.
Ring up customer services and ask whether the dealers do 24 hour test drives on 1.2 Polos and ask what the minimum age is. If you are under this age, ask about Lupos. Take the person's name and a reference.
Then call customer services back and demand that you get a "24 hour" loan car because you've been told by (insert name here) that they can do that.
Try that method and see where you get.
I am 18 years old and my SEAT dealer's insurance won't allow courtesy cars to be driven by people under 25. However, they insure me on either a 1.0 Arosa or a 1.2 Ibiza as a 24 hour loan car and let me use that while my car is in for warranty work.