Vince,
I'd agree it's on the low side
You've checked the air cleaner is not dirty and clogged?
Have the strainer out of the tank, especially given the fuel gauge is playing up a bit. At the age and mileage of the car, it's a fair bet the strainer will be a bit clogged up now. This can affect MPG in a strange way as the engine will run slightly inefficiently.
The strainer and gauge sender is accessed by lifting up the back seat and removing the big bung on the drivers side. Slip the pipes and electrical connector off the unit, undo the big threaded collar securing it into the tank and lift out.
You may just be amazed at the rubbish and gunk that has collected over the years.
Also make sure your fuel return line is clear all the way back from the pump to the tank.
Failing that, you may need to have your injectors overhauled and your pump retimed. Over the years, on mechanical pumps as fitted to yours, slight wear in the injection pump causes the injection timing to retard slightly. Timing is ultra critical on a diesel for best economy.
Does it smoke at all? Black smoke particularly?
Is your boost sense pipe (the little one from the turbo duct to the UFO on top of the injection pump) intact and good? Small boost leaks can also knock economy about due again to loss of engine running efficiency. It's worth checking all the jubilee clips on the turbo trinking for security and persished hoses, especially the short rubber one between the inlet manifold and the last plastic turbo pipe.