Just a few personal observations following on from some of the posts on here.
Firstly, why should PPL holders being allowed to instruct drive down terms and conditions for instructors. Historically the introduction of the BCPL and then the CPL requirement in the UK did nothing to improve Ts & Cs for most instructors, so why would the reintroduction of PPL holders instructing make them worse. They would still want to earn a decent salary, and if in the business for a career rather than just to log hours and move on would they not be less likely to accept low wages than an hours building frozen ATPL holder.
Secondly, I still fail to see (after 23 years of holding an instructors rating), what value a CPL or ATPL has over a PPL as the basic licence for an instructor - and I started out instructing with a PPL and now hold an ATPL. The sort of questions I have been asked by PPL holders and students over and above the requirements for the PPL have mainly been on subjects such as grass strips, PFA aircraft, VFR flying abroad, tailwheel conversions, aerobatics, air rallies, group flying - the list goes on but many of these things would be familiar to experienced PPL holders who might be interested in instructing, but are not touched upon in CPL/ATPL theory or on any integrated (f)ATPL course.
The main objections seems to be that those who hold a CPL think they are "better" pilots than those holding a PPL - but there is no reason that a properly conducted pre-entry skills test before the FIC course couldn't weed out anyone whose flying skills were not up to the required standard. And not having had to spend £30k - £50k on a CPL just might mean that a little more could be spent on a longer FIC course with a greater emphasis on teaching skills and less on learning to fly the aeroplane.
As far as the job market goes - it seems that the shortage at the moment is not of new FI(r) holders but experienced instructors able to teach the advanced PPL subjects (night/IMC/Aeros), as a lot of instructors coming into the industry are moving onto commercial / airline flying before they even upgrade to an unrestricted rating, let alone obtain any of the advanced ratings (except for a few going for multi or IR instructor to further their own careers). Re-introduction of PPL holding instructors being allowed to carry out renumerated instruction would reduce that tendency, especially if the hours gained instructing couldn't be counted towards the 1500 hours for the issue of an ATPL.