Just thought I'd update you on this.
Your advice was spot on, it was the coolant temperature sensor at fault.
I ordered a new one from the local Volvo dealer, £44.88.
Tried fitting it myself but fell at the first hurdle when i couldn't get the torx bolts off the thermostat housing, they were stuck fast and while I had the right torx fitting my tools weren't up to the job.
So my local mechanic did it, charged me £60. He did it without removing the thermostat housing but said it wasn't that easy.
So cheers all.
