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In your position I would hold tight, use the current bike, save up, then make a LFGSS Wanted thread and buy something decent for ~£350.
Trying to improve that existing bike with new parts is not a game I would play - you'll never improve the frame itself. Sure, spending £234 on components will help a little, but the parts themselves aren't brilliant. You can do better.
Save up that £234 and sell your bike for £125 then you have £360. This is not enough for a decent off-the-peg SS bike (even in sales with cycle scheme discount), but £360 on LFGSS can get you something sweet like a converted 531 road bike with decent SS parts. With £300-350 you can find, say, a Claud Butler 531 bike with Mavic rims and a Shimano 600 crankset and brakes. This will be lighter, faster and more fun than anything listed off-the-peg at £500-700.
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Freewheel - is there a specific White Industries model I should look for or are any of them fine? I wanted to change this as some reviews online mentioned they have a tendency to lock up. I'll keep an eye out for these, thank you.
The trials ones have more engagement points but are only available in a limited no of tooth options and the regular ones are fine anyway.
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Ndeipi
M_V
@wobster
That is some very in-depth information. I'll add some more information on everything and my 'train of thought'.
Would be great if I could get things on the scheme, as currently I only have around £140 to spare for any upgrades. Though I could fit the chainring and freewheel you mentioned in that budget.
Wheels are the first thing I was told to upgrade and those seemed to be the best choice, given the discount. I'll happily keep the ones on the bike currently, if there's no point in changing them or a massive difference. I'd love the lightweight Wabi ones but I'd have to order from the US. I'll keep an eye out on wheels for sale here but I don't really know what to look after - was mainly thinking weight. Miche seemed like a pretty good brand from what I could find online, so I th0ught the components I chose from them were good value.
Chainring - does DA mean Dura Ace? I think I'll wait for something better to come up here, I'm currently running a 46/17 drive and it seems alright for now, maybe if something comes up in 47T size I could switch to that. Would love a Sugino.
Freewheel - is there a specific White Industries model I should look for or are any of them fine? I wanted to change this as some reviews online mentioned they have a tendency to lock up. I'll keep an eye out for these, thank you.
Stem - it's the same size and angle I currently have, so yeah I presume it might be a pointless change.
BB - makes sense, I'll keep mine for now - but I don't really know what to look for on here and decide if something is a good upgrade - I'm pretty new to this.
@dancing james - I could use some new lights, as I have pretty cheap ones that aren't as strong as other options. Anything you could recommend maybe around 50£? I have a pump at home and I got a Kryptonite Evo 7 mini with a cable. Bike is also on Bikeregister and I'm thinking of insurance, too.
@MCamb - honestly don't know what the ratio or tire size is on that other bike. The front drive is a 2-speed chainring with a single speed chain going on the larger cog, lol. Tires are Schwalbe Lugano.