Hi Jayne, Border collies very quickly develop neurotic behaviors when they don't have enough in their lives to occupy them. I would suggest upping his activity level, they were bred to work in the borders, which are huge areas of land, herding sheep and they do not enjoy confinement. Feeding time as a puppy might have been a somewhat frenzied scramble for the dinner with perhaps a scrap or two making dinnertime anything other than a pleasurable experience. I would exercise him more and then try feeding him outside on the grass throwing his kibble onto the grass so he has to search for it, or use a dispensing treat ball for him to work for his dinner. Also up his obedience training and hand feed him and try to have everything calm at mealtimes with him sitting beside them. They need to seek out a behaviorist and one might find one in their area on the website for the Association of Pet Dog Trainers.
Do you know if the parents were working dogs with stable temperaments. This puppy needs a lot of mental activity, obedience, herding trials and agility, a tired dog is a happy dog. Do you know if the children in the house have been teasing him and encouraging him in the past to "chase tail", this is not a good game. Unfortunately now his tail is raw and painful he will more than likely chew it, it may be necessary to surgically dock his tail a few inches from the tip to good tissue to facilitate healing. Rose