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Thanks! Perfect explanation I think, it makes perfect sense. I have indeed left them as gaps for the reasons you describe. I do want to caulk the top edge though for aesthetic reasons as @dbr mentioned. I guess I could use a proper sealant instead. I did have to make a big gaping hole in the vapour barrier for the wires into the consumer unit to pass through, I think I'll sealant around it and that should minimise any water vapour getting through there. Could also box it in with a decently sealed door.
Hovis
Looks great.
So - did you leave gaps?
I'll try and give an explanation of how I think the vapour thing works...
The interior space is warm and humid (relatively), so there is usually a pressure from inside to out. Your warm humid air is trying to get out through the walls. If it gets into the bit with insulation, then as it passes through the insulation the temperature drops and you get condensation. The middle of walls is a bad place for that to happen, that's why you use a vapour barrier on the warm side of the insulation - so that water vapour can't get there. But vapour barrier won't stop condensation on the room side of it, it's to stop vapour getting through. Although it's the warm side of the insulation, the face of the wall is still a bit colder than the interior of the room, so the theory about sealing the ply with more permeable silicon is that the vapour will pass through the joints (due to the general low-level pressure for air to try and get out through the walls), and because the joints are more or less sealed, it can't ventilate out again, so it's stuck there getting damp between your ply and the vapour barrier. If you leave actual gaps, air should be circulating enough that you don't get a build up of damp/condensation.