Okay, this one's a long shot...

Perhaps this was it?

The Enchanted Castle (1979- )

https://www.youtube.com/watch?v=xrwlG2kOr3I

https://en.wikipedia.org/wiki/The_Enchanted_Castle

The children soon find that the ring has other magical powers such as making the "Ugly-Wugglies" (Guy Fawkes style dummies they had made to swell the audience at one of their play-performances) come to life. 

https://www.imdb.com/title/tt0291148/reviews

I wonder, since I have to fill more lines for my review to be accepted, if it was also the source of one of the most disturbing images from my childhood - a town meeting from which all the attendees emerged as faceless men with sacks instead of heads.

I too remember watching the enchanted castle and have the life scared out of me by the wuglies,they were the fake audience created by the children for their play,i think.when the wuglies came to life and tried to chase the kids through a hole in the wall,i never slept peacefully again

I know the name after almost thirty years of occasionally asking British people, "Can you remember a TV programme - probably in the late 1970s - where a group of children make some dummies to serve as the "audience" to a play they were putting on and the dummies came to life?" Cue years of blanks stares!

That is all I can remember from the programme but I was utterly petrified. One child rubbed a "magic ring" and said that she wished that the dummies would come to life. You had forgotten that and then the dummies started clapping at the end of the show. I remember them then chasing the children through a tunnel.