The price of AVGAS will have no effect upon your income, I fear. Crappy instructor' pay has bog-all to do with Tony Blair. It may be that a few more people will learn to fly, but your hourly rate won't change.
As I see things, the fixed costs of running a training aircraft can't vary much between schools. They all need a C of A , insurance, fuel and maintenance. One of the few areas in which a school's owners can save money is on Staff wages. Since all the tuppeny-ha'penny schools are competing on price, the result is as you see it.
Look at Humberside. There's, I think, four flying schools on site, all competing for the same bit of business. Result is that all the aircraft are under-utilised and everyone is cutting each other's throat in a bid to gain custom.
Seems to me that co-operation, not competition, is the way to improve the instructor's lot.