Job no longer exists on return from maternity leave: ask the expert

I am on maternity leave. Before I became pregnant my role was the manager of a department and I had one member of staff working for me one day a week. Just before I went on maternity leave, I was told my department would be outsourced, meaning my job no longer existed. They said they had been thinking about this for a while, although they had said they would cover my maternity leave. They assured me that they would be looking to offer me an alternative position once I returned to work, but they would think about what that position would be nearer the time. Now they tell me there are no vacancies and would not create a new role for me. They suggest integrating me into an existing department. I am concerned that this would mean I return on a lower ranking than when I left. Can they do this? If I turn down this role if it is a demotion would accepting redundancy harm any rights I might have in a case against them.  Also, because my returning role is undefined I did express a desire if possible to work from home for some of the time once I return and asked if this could be factored into the planning of my new role. I was told not to get my hopes up as they are unlikely to agree to it because they “don’t want to set a precedent within the company”. Is them not wanting to set a precedent considered reasonable grounds for refusal?