Bronx,
One thing that may be different in the US and the UK is the way instructors get paid. You seem to think the instructors decide what to charge, and maybe that's the case in the US. Here the schools have a rate for the students, and pay their instructors an hourly rate. This varies, but seems to usually be £40/hr for QHIs, and £30/hr for FI(R)s. So your new instructor is not getting £40/hr anyway. This is usually so even if you're freelance and not getting a lot of flying, though I believe there are other ways it's set-up sometimes. So it's not up to us to be willing to take a cut in pay. I don't think the schools would agree - though I'm relatively new to this, and not certain.
Whirlygig is right; the cost of living here is much higher than in the US. So are the costs of things like medicals, travelling to the airfield (that 80% tax on fuel again) and so on. Your newly qualified FI(R) couldn't possibly fly more than four hours a day, which is £720/week. To do that he/she would be working about ten hours a day - checking helicopters, giving briefings, etc. And that's also assuming perfect weather, a six-day week, and a constant supply of students. And those just don't happen.