Sidebar list padding issue in IE7

I’m having an issue with my sidebar navigation – I’m basically editing the default theme to style it up the way I need it to look and work and I have come a long way only for what feels like a really simple problem to stop me in my tracks. If you take a look at this page in FF and IE7 you will see what I mean: https://bmrt.org.uk/wordpress/

Ignoring the garish colours which I am using to try to help understand the padding, Firefox is displaying this as I wish, but IE7 is adding a large margin or padding above each link.

Here’s the sidebar CSS which I have stripped right down to fundamentals:

#sidebar {
background:url(images/sidenav_top.jpg) no-repeat;
padding: 155px 0 10px 17px;
width:163px;
float:left;
margin-left:0px;
font-family:Verdana, Arial, Helvetica, sans-serif;
text-decoration:none;
color:#3b3b3b;
}

#sidebar a:link, #sidebar a:visited {
text-decoration:none;
color:#3b3b3b;
}

#sidebar a:hover {
color:#b4201c;
}

#sidebar ul {
margin:0;
padding:0;
}

#sidebar ul li {
list-style-type: none;
list-style-image: none;
background-color:#CC9900;
}

#sidebar ul ul li {
margin:3px 0 0 0;
padding:2px 0 7px 0px;
border-bottom:1px solid #e4e7c3;
background-color:#00FF33
}

I would appreciate any ideas!