Tell people you don't want to make a big fuss over presents this year, and agree to a spending limit of perhaps 5 pounds per adult (or even less, depending)
Maybe you could bake a few batches of different christmassy biscuits, wrap a few up in cellophane with tinsel etc, and that would make good but cheap little gifts for people. Much nicer than tat from Poundland. You can do this with the 5 year old, and turn it into a nice Christmas activity for them.
Don't spend much on the 1 year old's presents (they will appreciate cheap/second hand presents just as much), and try not to go overboard on the 5 year olds.
For other family, maybe home made stuff if they like that kind of thing, and if you are good at making it. I personally love home made stuff, but it is important to make things that a particular person would actually like to receive rather than what looks like fun to make on pinterest, iyswim. For close family, bulk out cheaper bought gifts with home made goodies, eg: Chocolate truffles using cheap dark chocolate (30p/100g kind of price), double cream and butter have gone down amazingly well in the past when I've made them (I put a slosh of whisky in too) and are easy (if a little messy) to make. Christmas biscuits, shortbread, etc can be cheap to make and there are loads of good recipes out there. Just be wary of some christmas recipes (like fruitcake) which need a lot of costly ingredients. Packaged carefully home made edibles can look really nice. If you need to give token presents you could put chocolates or sweets etc in cellophane inside a cheap but nice mug or similar. Maybe speak to some family members about setting a maximum limit on presents, and try to avoid buying for lots of extended family.
For grandparents of the dc, try giving a present "from the dc" as well, like a handprint ornament or Christmas card. Fun to make with the dc, and makes your overall offering look more generous without spending any more money. Search pinterest for "kids hand print Christmas" or similar.
Have a look on pintrest, there's loads of ideas for inexpensive home made gifts.
There's a Christmas bargains thread and a home made pontastic thread on the Christmas board so have a look there. It might be better if you reposted on the Christmas board as you'll get loads of ideas now.