Decorations:
Go out and forage. Even in urban areas you can can find Ivy easily enough. Pine cones, conkers etc. In the past, I've also asked if I could take some of the off-cut Christmas tree branches from shops selling Christmas trees.
Paper chains and salt dough decorations are very cheap.
Big branch for a tree OR apparently if you go to B&Q on Christmas Eve, the trees are reduced to £1. I've never had the nerve to try it.
Presents:
If you can, go to charity shops/school Christmas fairs in quite wealthy areas. You will get good second hand pickings, eg last year I got a pair of walkie-talkies for 35p.
Look at the bargain threads for other cheap present ideas.
For food, Aldi/Lidl is the way to go. They have got some Christmas stuff (chocolate coins, Christmas cake and puddings etc) in now, so if you have one nearby you can a little bit each week, or start putting a bit of money aside now and do a shop later.
Chicken instead of Turkey.
Activities:
Collecting pine cones and making decorations together.
Baking biscuits (and hanging on the tree, giving them to family etc).
Museums, libraries, churches and parks often have free children's activities.
Go to the library and get a load of Christmas books out.
My extravagant spend, which might be out if your budget but is worth doing if you have £6 to spare, is the White Company Wi yet pot pour to oil. It smells utterly gorgeous, and the candles cost £25, but for 6 you can out drops of oil on pine cones or on a bag of rice on the radiator, and your house will smell like a luxury hotel.