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Our school has about 12 Asus Chromebooks (Google Chrome OS). Our internet connection is 1 Mbps down / 0.5 Mbps up and whenever the computers are switched on, the internet speed crawls to a standstill.

I'm not sure exactly what is causing it (because I haven't analyzed the network traffic) but am assuming that the Chrome OS automatic updates is likely responsible.

Is it possible to turn off automatic updates on Chrome OS?

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Reset to default
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If you are managing the devices via a Google Apps Admin console, you can do this with Device settings. This process is detailed here under 'Restrict Google Chrome version to at most'.

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