I am in o2 favourite place but when just now I called another o2 number (from home within my postcide area) - which should be free - I was charged. At the end of the call I had lost near to £8 of credit. Any thoughts?

Ring them up of course! You might be bordering another 'area' which would be one explanation for the charge.

£8 is the charge for a call to another O2 phone of over 2.5 hours.
If you are making calls that length then you've probably used up your Favourite Place minutes.

Switch to giffgaff - o2's secret and very cheap tariff.