I pushed the pads back in with a screwdriver yesterday but it's hard to say how easily they should move. The wheel spun freely. I then applied and released the brake and spun the wheel and you can hear the pads rubbing on the disc in a certain spot. I can't find the dial indicator so I used a feeler gauge between the pad and the disc and its got a warp in it, something like 14 thou. I haven't had time to look at it today but I will check a few things out tomorrow. 

That's too much, grab another disc mate, reckon you have found the culprit 👍

What rear caliper have you got Beags, the single piston one with one side sliding on 2 pins that was used almost forever?

It is the one piece calliper with the four pistons that has the arm on it to mount on the axle. It hasn't been re-sealed for at least 14 years, probably never been done.