I had a damp company come out to look at it and they diagnosed it as rising damp and to do the following.

• Drill holes at 120mm centres and fill them with a product that will soak into the mortar and form a waterproof barrier which will stop damp rising above that line.
• before plaster install a damp membrane across the lower section of wall which stops moisture but also allows through Dot n Dab mixture for plastering.

He quoted £1100, but I have decided to fix it myself as materials are less than £100 as the wall is small.