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If I do a search on Google using a key word phrase used on our website, does it rank the business I work for higher because it can work out that it is a close geographical match (and the key word phrase is a close match)?
If so it could be skewing what we think is our natural listing page rank because whenever we perform the search we will be in the local area, and therefore our website will be higher than if I did the same search on a PC in London?
Yes, that's what they do. For more information see - http://support.google.com/websearch/bin/answer.py?hl=en&answer=179386. You can change your location though - see that page for details.
However you can't turn it off:
The customization of search results based on location is an important component of a consistent, high-quality search experience. Therefore, we haven't provided a way to turn off location customization, although we've made it easy for you to set your own location or to customize using a general location as broad as the country that matches your local domain.
