It turned out to be faulty indicator unit behind the steering wheel. The local Peugeot dealer tried to sell me the part for £290. I managed to get a valeo part for £140. (try an get the part no off peugeot there are tons of different indicator units) Got an auto electrician to fit it for £90. The auto elec bloke tells me he fits no end of replacement indicator units on pugs its a very common fault.
Its not something I would have fitted myself it involves messing with air bags and the air bag ecu.
Apparently on the older 206's you can remove the stalk and turn the contact plates around. bUt this wasn't the case on mine.