The tube is indeed punctured Andy, but you can normally repair it. In fact you can do it without taking the wheel out if the tyres are the same type already. You'll need a puncture outfit, from any bike shop. With the bike upside down, just release the brake, take the non cable side of the tyre off the rim as I've described, then pull the tube from the rim and free the valve as described, so the tube sits between the wheel and frame.
Now pump some air into the tube and you'll hear it escaping from the spot where it's punctured. Clean the tube area at the puncture point with the little bit of sand paper that's in the puncture outfit. Then select a suitable size patch for it and take off any protective paper or foil from it's contact surface. Open the tube of rubber solution and put a little spot on the patch surface and quickly smooth it over the surface with a finger tip. Don't dally since it will start setting quickly. Then do the same on the punctured area of the tube, covering an area a bit bigger than the patch. Let the rubber solution completely dry on both.
When they are completely dry, centre the patch over the puncture hole and press the patch firmly in place, it will bond instantly. Take the small block of French chalk and either rub it against the rasp area on he puncture outfit box or scrape it with a knife edge to let a shower of a few chalk particles cover the patch and solution area. Smooth that over the area so there's no sticky surface left that might glue inside the tyre.
Pump just a little air into the tube to give it a tiny amount of pressure and ascertain there are no more leaks. The traditional way is by passing it through a bowl of water to let any stream of air bubbles show up. A less messy way is to use the lips, the most sensitive part of your skin, by passing the tube in front of your lips about half an inch away. The lips can detect the slightest air stream. Do this over an area covering a few inches either side of your original puncture.
Now release most of the air from the tube. Place your finger tips of one hand inside the tyre against the inside of the tread area and rotate the wheel right round, feeling for what caused the puncture, nail, stone, glass or thorn. If and when you locate it, prise it out from the tyre tread side.
Finally place the tube back into the tyre and proceed as I've already described to put the tyre back onto the rim and pump it.