Let me try to explain why I think that s 32 is not applicable to what Gem wants to do.
S. 32 is grouped under the heading
Education along with ss 33 to 36.
S 174 provides a definition of "educational establishment and related expressions", which on the face of it might appear to include instruction (the word used in s 32) since it is clearly related by virtue of being under the same heading. But the Act does not define instruction so we need to look elsewhere to see if the use of 'instruction' as opposed to 'education' is significant. This part of 1988 Act arises principally from the 1971 Paris Act of the Berne Convention (as amended on 28 September 1979). The relevant Article is Art 10 (2).
(2) It shall be a a matter for legislation in the countries of the Union, and for special agreements existing or concluded between them, to permit the utilization, to the extent justified by the purpose, of literary or artistic works by way of illustration in publications, broadcasts or sound or visual recordings for teaching, provided such utilization is compatible with fair practice.
The Paris Act refers to 'teaching' not 'instruction' and so it is unclear from this why the drafters of the 1988 Act chose to use a different word. Despite an 'educational purposes' exception being included from the very first Berne Convention of 1886, in wasn't until the 1956 Copyright Act that the UK first introduced the teaching exception (in
s 41). This is where the word 'instruction' first appears in the statutes.
(a) in the course of instruction, whether at a school or elsewhere, where the reproduction or adaptation is made by a teacher or a pupil otherwise than by the use of a duplicating process, [...]
It is worth acknowledging that the words 'or elsewhere' might support what I assume is your argument that s 32 of the 1988 Act applies outside educational establishments as defined in s 174. However I suggest that the word 'elsewhere' merely refers to other establishments such as universities, colleges and the like (as encompassed by s 174) because the word 'school' is to narrow to include them. Since this was clearly unsatisfactory, this wording did not survive in the 1988 Act, and, I submit, s 174 was introduced to reflect the wider, formal, educational environment to which all the sections under the Education heading applied. I think it makes no sense to see s 32 alone out of the sections under the Education heading as falling outside the s 174 definition.
I am happy to concede that this is not settled law in the UK*. But with the rise in online instruction generally, and
MOOCs in particular, it is only a matter of time before this issue is tested in the UK courts.
Incidentally, for the sake of completeness, the EU Directives, principally the Copyright Directive 2001/29, are of no assistance. Directive 2001/29
Art 5 (3)(a) leaves it to member states to determine the extent of any exceptions for the purpose of teaching.
* The USA has already attempted to address this specific issue with the
TEACH Act.
Edited to correct typo in the numbering of the EU Directive in the final paragraph.