Is there anyway around this error please? The server has confirmed that libxml2 will not be installed.
libxml2 2.7.0 is at least required. Currently 2.6.26 is installed.
To fix this issue update your libxml2 version and restart your web server.
LibXML 2.7 has been released in 2008 and older versions are not compatible with WebDAV leading to data loss and other problems.
You might want to consider to a hoster that uses newer technologies than one released in 2006 (2.6.26). Additionally I highly suspect that your hoster uses also otherwise outdated and insecure software and takes your data at risk.
Considering how hold 2.7.0 is, it seems to make more sense to ask your hoster for an update of the libraries, that is long overdue already :-/