If the guitar plays then it will be fine, I jam with a few lads who use very cheap chinese copies and they still sound good. You will probably require some form of effects unit if its plugged into a PA.
As for the PA I am not that convinced it will have enough juice to clear the drums. The drummer would have to play quietly so the rest of you could be herd. Saying that its very cheap so if there is any doubt about the band staying together then it would be worth the first few sessions. If you are going to stay together then something bigger from the start would be a better investment.
For an extra £100 you should be able get a good loud starter PA system. Try building a rig from
500GB Seagate FreeAgent Hard Drive - Maplin they are selling 800W power amps for £100 then just add speakers and a mixer.