Thanks BenN, I'm waiting to hear back from my cc company. It is likely to be my route of recourse as Madison have said they will only refund the trade cost. Personally I think Madison should pick up the whole bill as a lesson to them for selling seriously substandard gear.
I do wonder what would happen were I to continue riding it and ended up under a bus due to the fault... downside is I wouldn't be about to find out!
On this note, at the recommendation of Citizens Advice I notified Trading Standards. They can't act on my behalf, but are keen to follow up. Will be interesting (if I hear about it) what happens!
gembo - I opened my second hub to see if I could spot anything wrong. You're meant to do this every 5000 miles to replace the grease. What I found, 1000 km in, was that the extreme non drive side had beautiful white grease and the rest of the hub was full of watery brown muck. It amazes me how Vin Cox managed to ride around the world with an Alfine 8 spd! Did he stop every week and get a new hub?!
Instography - Madison have all along been quite happy to replace the hub gear and even suggested swapping the bike for a dérailleured model. Given it's taken them 7 weeks to say this I've since bought another bike (life must go on).
I'm also seriously distrustful of the Genesis brand now. Whilst the main issue lies with the Alfine hub (only lasting 1000 km before needing to be replaced) the bike has many other problems. In an effort to save others from making the same mistake (buying one) I'll list below:
Avid BB5 brakes require adjusting every 50 miles or so otherwise they don't stop you, when they're set up to stop you they rub/drag
Even when set up well the front brake lacks the stopping power of the back brake, it's been suggested to me that because the front brake lever also has the shifting mechanism in it it isn't capable of pulling through enough cable...
The versa shifter slips whilst changing down, maybe once in every 15 shifts, leaving you in bottom gear
The bike with mudguards and rack (750 g) weighs 15 kg (60 cm frame)
The throw on the versa shifter is enormous, you need big hands to change up!
The wheels are badly made: I snapped a spoke in the rear free-wheeling down a smooth road. The front wheel spent most time out of true (I never used this bike for cyclocross, like it's designed for).
As a comparison, since I stopped riding the Genesis day one and now use a Mercian (11 kg with guards, no rack) my average speed has gone up by ~ 5 km/h. This is likely a mix of the reduced weight and lack of brake/hub drag.
Thanks for all your comments! If anything interesting comes out of the process, I'll definitely update you.
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