There is a partial exemption to the licensing requirement for music as part of a religous service (not dancing). Any other musical activity in a church, paid or otherwise would be considered as public entertainment and require a PEL. There is an oficial reply on the the subject, posted here somewhere.

I have that wrong, I'm afraid. It is true that in London any concert in a Church would require a PEL. Outside London there is an exemption to the PEL reqirement (a)to any music (i)In a place of worship; or
(ii)performed as a an incident of a religous meeting or service;

So a concert in a church (outside London), would not require a PEL, as long as it did not contain dancing. This would mean that a full blown commercial public entertainment of music, could be staged in a church. With no emergency exits or adequate sanitation.

But three performers in a perfectly safe and inspected pub cannot, without a PEL.