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39.—(1) Subject to paragraph (2), the funding authority may pay capital grants in respect of expenditure of a capital nature of a class or description specified in Schedule 5 incurred or to be incurred by the governing body of a school in respect of which these Regulations apply.
(2) In the case of a special school which is established in a hospital, paragraph (1) shall apply only in respect of expenditure of a class or description specified in paragraph 1(d) of Schedule 5.
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