what happens to your funds when wallet provider packs up? Supposing the company that provide Electrum wallets goes bust and the service/software is withdrawn. Does this mean my fund disappear? If not then how would I recover my funds?

More specifically would the 12 recovery words (provided by Electrum)  have any use if Electrum wallet service was no longer available?
Electrum is an open source project, it is not a company. Even if all the volunteers working on the project right now decided to abandon the project, the wallet is all open source so anyone can pick up where they left off. 

It is not possible for "Electrum wallet service" to no longer be available because anyone can run the Electrum server that Electrum requires. The 12 recovery words by itself are sufficient to recover all your funds. You will either need to connect to an Electrum server in order to do so or run you own Electrum server. Even if that's not an option for whatever reason, you could also regenerate all your private keys from the electrum seed and import them into any other wallet.