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@SSSasky
Hi-tensile steel? Holy crap. That's gonna be one heavy bike. Terrible quality components throughout. A waste of money.
There might be a market for this kind of bike, but it's an exploitive market. It relies on the consumers' ignorance to fool them into thinking they are getting a good deal. In fact, they are buying a bike where everything needs a lot of maintenance to keep working at all, and will work badly regardless (not to mention the target market are exactly the people who will do NO maintenance).
Bikes like this are bad for the cycling industry, and the people who buy them. Sure, a few more people will be on the road with bikes like these. But the majority of these people will give up once the bike breaks down and they find out how much it costs to upgrade to components that won't break down immediately. We're talking about people having to replace, at a minimum, the wheels and bottom bracket, probably headset as well, maybe the brakes. They will quickly surpass the price of the original purpose.
From the perspective of value, quality, and the goal of getting more people on bikes, companies would be much more well advised to raise the price by £100 and spec some decent components. Raise is by £150 and put a decent frame on as well.
Then it's up to the cycling community and industry to educate people about why they should spend a bit more for a new bike. And if they're still on a tight budget, great--set them up on well made conversions. They'll get better components, and a unique bike.
If you want to encourage more people to ride bikes, you need to offer them lighter weight, well made bikes with decent components so that the bike is fun to ride for more than the first week. Rip them off at the very beginning and they will resent the bike and the entire industry for conning them.