What should i plant?

If it's in sun, I would create a "cottage garden" by growing flowers and veg in this area. The veg could be the ornamental types, red lettuce, rainbow chard etc mixed with flowers. This would fit in with your plum tree. As the plum gets bigger, it will eventually need all this space so you could either extend the border out or just leave the plum to fill it (unless you intend training the plum on the fence only?)

Fill the front with wallflowers (buy them right now to flower next spring) and/or sweet williams (also plant now for next spring). By the time these come out, you can be planting your veg and flowers.

Does it get sun? And where is it in the garden - at the top, where you can see it from the house? Answers would be could just in case you don't want to grow veg in it and I can come up with other suggestions

thanks for the idea fractal, i'm actually not a big fan of vegetables so it would be a waste for me to grow them. i'm now going to sound like a complete idiot but what do wall flowers and sweet williams look like? (forgot to mention i'm new to gardening)
Bamboo, the area is in full sun and my lounge looks out on to the area. Not sure if this makes a difference but the soil is like clay. As per your suggestion i also plan to move the tree so its not so close to the fence.

Good. I hesitate to say this, but the area needs to be enlarged a bit! Given that you're growing a tree there, it will eventually be a shadyish, dry spot, so what you put in there permanently may need to take that into account. In the meantime, though, you could just use wallflowers, etc, as mentioned by Fractal - google them for what they look like - wallflowers are usually sold in bunches, bare root and you can get them at the garden centre (ask) and often on flower stalls in September. Sweet williams will be available at the garden centre September, as bedding - they're biennial, so that means you plant now and they'll flower next year.
Once the tree gets going, you'll probably want something permanent in there, but you can, because its so small currently, just put annual things in for colour, like wallflowers, etc. Maybe its time you got yourself a garden encyclopaedia or a book that shows plants, at least! Google's good, but it has its limitations

it didnt even occur to me to look in my garden encyclopaedia, have done now. lol!
The wall flower is a lovely suggestion and i will be popping down the garden centre shortly to see if they have any in stock yet. thanks again for the help