I would like to mate my bitch, for the first time, later in the year, so at the moment have a lot of reading-up to do, but one of the possible dogs I would like to use is her grandfather, who is quite an outstanding dog.   But - would they be too closely related?   Sorry if it's an obvious question.

grandfather is not too close at all, you will find its very common. :-)

It is often quite a good combination and can "fix" a trait, so make sure that they don't both have the same faults.  Is the other half (three quarters) of your bitch's pedigree close breeding as this can also have a bearing.