Wow, Islabikes have gone up in price since we bought! (3 years ago).
It's a nuisance if they learn to ride without stabs too early, anyway.
Would make sense for OP to get a basic wooden balance bike for the 3yo (St. John St. Cycles often sells them for under 50 quid on Ebay) and a better quality bike for the 5yo to pass down later (like a Cnoc 16, maybe, or small Beinn 20). Gears are a waste of time for under 9yos, ime, but you probably can't avoid them unless you go for something like a lightweight BMX racing bike (which aren't that ideal for off-road).
My small-avg. height just-turned-5yo DS could just about ride our Beinn 20 (which I think is a "large") It was a bit of a stretch for him, and I don't intend him to take that bike full-time until he's almost 7yo. Must admit we tend to rely on basic cheap & cheerful bikes we've picked up at Carboots until as late an age as possible.
This site looks good, Ridgeback and GT cycles have good rep; you could phone dealers and ask if anyone stocks within a reasonable driving distance.
Wasn't there a very good cycle shop in Coalville? Catering for the Coalville Wheelers, iirc. Otherwise, DH recommends Sid Standard in Beeston: Tel. 0115 9256647, 35-37 Chilwell Road, Beeston, Nottingham, Nottinghamshire, NG9 1EH.