are you connected to gpio 17 or pin 17?
here are the gpio names: https://learn.adafruit.com/system/assets/assets/000/008/819/medium800/gaming_gpio-rev2-new.png?1396874700

here is the pinout:
http://elinux.org/images/6/61/RPi_P1_header.png

gpio 17 is on the left side, 6 down. pin 17 is on the left side, 9 down.

You can use either, but you need to change your code from

GPIO.setmode(GPIO.BCM)

to

GPIO.setmode(GPIO.BOARD)

You may want to take a quick gander at this. http://makezine.com/projects/tutorial-raspberry-pi-gpio-pins-and-python/

If you are still getting stumped, let us know and we can try to troubleshoot it further

Thanks for your help. It definitely is GPIO17 because Maplin's terminal block maps to GPIO17. I connected one end of the plunger to GPIO17 and the other to GND.

I've changed the code as follows:

import RPi.GPIO as GPIO
import time
import os
GPIO.setmode(GPIO.BOARD)
GPIO.setup(17, GPIO.IN,pull_up_down=GPIO.PUD_UP)
while True:
print GPIO.input(17)
if(GPIO.input(17) == False):
os.system("sudo shutdown -h now")
break
time.sleep(1)

Then saved this as shutdown.py and edited file /etc/rc.local to add:
python /home/pi/bin/shutdown.py &
(before last line)

Still no working...

I know that I have the pi booting straight into Mame4All by adding a line in the .profile file. Would this somehow stop the rc.local file from loading and therefore not executing the script?