got the same prob too the 7 inch long live cable from pcb to can element overheated an melted the insulation, i see one strand split so i guess the resistance increased and therfor the heat on the cable to a point that it melt insulation
the spaded cable connecting the can element to pcb has probably burned and changed the resistance of the connection, replace the cable.
either that or the 40/50Amp microswitch needs replacing
Is it necessary to replace the whole valve assembly? the diapragm is faulty, microswitch is ok. actuator not pushing the microswitch closed when hot water demanded. therfor hot water is only available when microsw closed manually or if the CH is turned on constantly.
been quoted 350 quid to fix...