Ok I finally managed to solve this. First a summary of the issue.
OS X - both client and server include the standard ntpd software which can act as an NTP time server. It is common practice on larger networks i.e. anything bigger than a home network to nominate an internal server as your internal NTP server and then have that NTP server sync itself to two or more external higher stratum NTP servers. As a reminder directory services like Open Directory and Active Directory or more specifically Kerberos require that all the clocks of the computers on the network be within five minutes accuracy of each other.
A lot of people will either just leave their client Macs pointing directly to Apple's free NTP servers, or may have gotten as far as setting up a Mac as an NTP server and then pointing their clients to it. I had been able to setup a Mac server as an NTP server internally on our main network and it in turn was syncing to Apple's NTP server. An example guide on how to setup a Mac as an internal NTP server is here https://macmule.com/2013/12/15/how-to-use-osx-server-as-a-time-server/
The problem arose when I tried to do this on our other ultra-secure network which does not have an Internet connection at all. With no Internet connection the Mac server itself had no source to which it could sync, without a source to sync to it would not allow any clients to sync to it. This is as far as I got before I posted this original query. The above article does not cope with this situation.
I have now managed to find the solution. In a similar situation some larger organisations solve this by connecting a GPS clock to the server and configuring that as the the NTP source for their server. The ntpd server by having this as a valid time source is then happy to itself serve to client computers. I could have done this but it would have involved buying a GPS clock and all the hassle of trying to get that working with a Mac. I did however find that there is a way to define a local computer clock - literally something referred to as a LCL. See http://www.ntp.org/ntpfaq/NTP-s-refclk.htm
To cut a long story short, one needs to define a special local address for the Mac server to use its own clock as its own local clock source. This is done by adding the following two lines to /etc/ntp.conf on your server.
server 127.127.1.1
fudge 127.127.1.1 stratum 10
You then need to reload the ntpd process on the Mac server so it is forced to reread this preference file. I did this by force-quitting via Activity Monitor the ntpd process(es) but using the kill command or using launchctl are other methods.
Then all you need to do is point your client computers to your own internal NTP server.