??? I am puzzled by this thread
1. I need something easier on fuel. I don't do mega miles, just your average.
The 1.8T is really pretty frugal for a petrol, especially considering the performance. 37mpg on a long run is easy enough to achieve. Sure a diesel will give you more mpg, but with the higher cost of diesel fuel, servicing and the premium you pay to buy a diesel it makes absolutely no sense to trade in an octavia for a diesel unless you are doing 20-30k miles per year. It will cost you more in the long run and you'll have to put up with driving a diesel

If you drive the diesel hard you'll be suprised how quickly the mpg will drop too.
2. I've been wanting to chop my car in for something more fun. Don't get me wrong it is a good car just isn't amazing to drive and now I've got to get shot of it and I don't want to lol, but needs must. I've had a quick look and the only thing that sort of appeals is a Focus 1.6 TDCi...
Seriously? Sure there are cars that are more fun to drive that the vRS, but I can't think of any that meet your practical requirements and budget. Sure a focus can be good fun ... but the 1.6TDCi? A big heavy diesel lump in the front always wrecks the handling. To see any serious handling improvement you are looking at something rwd like an s2000 - but then other costs like insurance, tyres etc get silly.
3. I need something which is much cheaper to insure (currently pay £100 p/m - 10 month bonus accelerator)
Wow that's a lot. I have a chipped 1.8T 4x4 Octavia .. insurance £300per year. Perhaps you should be looking at a 1.2 Fabia or fiesta with 50bhp. I imagine that's the only way you'll see the insurance and fuel savings you want with your budget ... but fun? hmmm!!!
Honestly it seems to me you have convinced yourself you want to change for the sake of change. In the long run keeping your current octavia is going to be the cheapest option unless you trade in for a shopping trolley. I've had my octavia 8 years and only recent spent my first pennies on it refreshing the struts and bushes etc (not because it was strictly necessary but because it took the ride and handling back to how the car was when new) They are solid reliable cars compared to most the rubbish out there.
The only other car I can think of that *might* fit the bill is a Fabia vRS. Diesel, perhaps a bit cheaper to insure and still reasonably fun ....but it won't be a patch on your octavia in so many ways... but then there is always the curve ball - how about an old Mx5? Fun, lightweight so fuel mileage is good, and pretty reliable? Of course practicality goes right out the window but you can't have it all!