A budget of £400 for everything I would say.
Didn't realise a grinder could cost more than the coffee machine!
Yeah it can get kind of scary when you see the prices of some kit.
myespresso.co.uk have some decent combo's for a starter kit.
Alternatively after a bit of snooping on their site you can pick up the following:
Gaggia Classic for £200
Gaggia MDF grinder for £139 (there are alternatives that are equally as good in this sort of price point eg. sub £150 market)
so giving you enough money to get a decent tamper £14ish and some cups/coffee.
If they don't really float your boat there is a gaggia brera bean to cup machine online for £389 brand new which combines the grinder and espresso machine in one. Not sure how good it is but I am sure it will save a bit of space for you. As for maintaining the machine that is another question and the trade off with this sort of machine is generally if you want to upgrade to a better espresso machine you are going to have to get another grinder.
You obviously have the various pod machine options that are available to you. Personally I am not impressed by the coffee it produces. The quality has certainly improved from the good old days of "one cup of brown please" but still no where near the quality of somewhere like hasbean, squaremile, stumptown etc.
I personally would always suggest in investing in a good grinder as you are likely to stick with that for longer than the espresso machine. From the months of research I did before I brought mine it can be a bit overwhelming with the volume of positive and negative reviews you can find on every machine.