never ,ever heard of this before
however, I would let my daughter go to the party and spend £5 on a pressie and £5 towards the party. I think £10 is a reasonable amount to spend in these circs, presuming you have the £10 yourself,
if they are that short of funds, that they have to ask, tehy are doing all they can to ensure their child does not miss out on a nice birthday.
BUT as the children are so young and won;t remember the party, seems a tad strange . but there you go.
do you know the parents at all? are they taking the p*ss do you think , or genuinely in need?