Thanks for your replies - the more the merrier. I have also been looking at other makes of cars.
The 1.6 HDI diesel from PSA (Peugeot / Citroen) is used in many cars including the: mini, 207, 208, C3, DS3, fiesta, focus, C30, 1 series ED among others. This engine seems to be very economical.
My research on fuelly.com, honest john real mpg and forums has shown that small cars (fiesta, etc) using this engine achieve 55-60 mpg and small family cars (focus, etc) achieve over 50 mpg all in real world conditions. The 1.5 DCi Renault and Nissan engine also prove to be very economical in real world conditions.
From what I can see the real world MPG of VAG cars are further away from the official claimed mpg than most other manufacturers.