Thanks Guys. You're right about the charging voltage - on further inspection found a broken wire to the battery hidden in the wiring loom - fixed this and saw the charging voltage across the battery go up to 14 volts with the engine running and drop back down to just over 12 volts when the engine is killed. So that's one mystery solved.
Studying the 1988 wiring diagram it looks like the lights only work when the engine is running as they are powered by a separate lighting coil. the battery does power the indicators, horn and brake light. The lights work when the engine is running. Seems an odd setup but maybe how it was designed. Would be helpful if there's anyone out there with a working 1988 model who can confirm this.
Cheers.