I'm sure that somewhere in all the recent stuff that's been quoted the DCMS has specifically said that the public entertaining themselves should be considered incidental music

This is the latest Guidance on what performances are exempt under this. Not sure that it helps much.......

http://www.staffsmoorlands.gov.uk/downloads/Item6_App2_3_.pdf

It contains the following gem:
The music is likely to be licensable if those present at the premises are arranged as an audience, compared to customers seated as diners, for example.

And the following is an example of an activity which is licencable: Pub promotes sing-along event with pianist
(or other single instrument)