Just had a thought. When I took the instrument cluster out, I noticed that there were some numbers etc hand written on the back of the unit with a permanent marker pen which would suggest to me that it is a replacement unit, i.e. not the original cluster. The chrome paint around the dials is worn off as well, suggesting that the unit may have been stored face down on a shelf for sometime in order for the chrome to become worn.
Anyway, consider these facts:
1) The speedo does work, but always understates the actual speed. All the ABS sensors give correct readings when the wheels are spun whilst on the ramp. The ABS unit looks okay as do the wires etc. One of the brake pipes feeding into the ABS unit has been replaced (shiny copper pipe) and I am satisfied it has no bearing on the problem.
2) There is no speedo sensor on the gearbox by the drive shaft. Where it should be located there is nothing there, not even a hole for the sensor to go into, just solid metal casing. So this would indicate that the speedo reads the speed via the ABS system. This would indicate that the car is a PhaseII model?
3) The car was registered on 28/05/1998, so I believe that this car is an early PhaseII?
4) The instrument cluster looks like a replacement. The warning lights between the dials are arranged with 5 lights on the top row, and 3 lights on the lower row, I understand that this is a PhaseI cluster and would not be compatible with a PhaseII car?
So, to conclude...I think this is a PhaseII car and should have a PhaseII speedo which takes an average reading from the ABS sensors. Someone in the past has replaced the cluster with the wrong PhaseI unit which takes its reading from a speed sensor which doesn't exist on this car, therefore, the cluster is not compatible with the car and is taking a reading from the ABS, thus it is incorrect.
...I have today purchased a used PhaseII unit with almost the same mileage, should arrive in the next few days, fingers crossed it may sort out the issue?
Any thoughts guys?