Not sure what they're called over there, but on this side of the Atlantic you can often find bags of leftover yarn at thrift stores...places where people give away the stuff they don't want, the store sells it and the profits go to charity (sometimes). You might find lots of yarn that way on the cheap. You can find free knitting patterns for almost anything online.

Anhata
www.familynaturally.com
Your Family's General Store, Naturally