Microsoft does offer out-of-warranty repair services, although they are not cheap (then again, with modern electronics, few repairs are cheap). Their Warranty and registration FAQ gives the following information:
Q. How much does an out-of-warranty repair cost?
A. The cost of an out-of-warranty console repair varies:
- $99.99/£62 plus tax if you submit a repair request online (at https://myservice.xbox.com/)
- $119.99/£75 plus tax if you call Xbox Support and have a support agent create the repair order for you
When you send your console to our service center for repair, we test your console for three flashing red lights or an E74 error. If your console does not exhibit three flashing red lights or an E74 error, and you are out of the standard one-year product warranty, you can have your console repaired for a fee or choose to have your console returned to you unrepaired.
Note: If your console has three flashing red lights, please try using our Flashing Red Lights Solution to troubleshoot the problem before sending your console to us for repair. If you have an E74 error, submit an online repair request.
The Flashing Red Lights Solution can be found on the 360 support site ... I've (cross my fingers) never had to try it yet, but perhaps that will work for you and save you quite a bit of money.
(Note that links above are to US support, but the UK support page lists the same information, with only the costs changed.)
