(1)This section applies where the Secretary of State is satisfied that a grant-maintained school as currently constituted or conducted is unsuitable to continue as a grant-maintained school on either or both of the following grounds—
(a)that the number of registered pupils at the school is too small for sufficient and suitable instruction to be provided for them at reasonable cost, and
(b)that the governing body have been guilty of substantial or persistent failure to comply or secure compliance with any other requirement imposed by or under this Act or any other enactment.
(2)The Secretary of State may give to the governing body a notice in writing stating the grounds on which he considers that the school as currently constituted or conducted is unsuitable to continue as a grant-maintained school together with full particulars of the matters relevant to each such ground.
(3)Where any of those matters are stated in the notice to be in the opinion of the Secretary of State irremediable, the notice shall also state that the funding authority’s duty to maintain the school will cease on a date specified in the notice.
(4)Where subsection (3) does not apply, the notice shall—
(a)state that the funding authority’s duty to maintain the school will cease unless the matters of which particulars are given in the notice are remedied,
(b)specify the measures necessary in the opinion of the Secretary of State to remedy those matters, and
(c)specify the time, not being less than six months after the date on which the notice is given to the governing body, within which the governing body are required to take those measures.
(5)Where the governing body fail to take the measures required under subsection (4)(b) by the notice within the time specified in the notice (or allowed by any previous notice under this subsection), the Secretary of State shall, within the period of two months beginning with the date next following the end of the time so specified (or allowed), either—
(a)give notice in writing to the governing body extending the period within which those measures are required to be taken, or
(b)after consulting the local education authority (and, if the school provides education to which section 2(1) of the [1992 c. 13.] Further and Higher Education Act 1992 applies, the appropriate further education funding council) give notice in writing to the governing body that the funding authority’s duty to maintain the school will cease on a specified date.
(6)Where the Secretary of State gives a notice under subsection (2) or (5) which states that the funding authority’s duty to maintain the school will cease on a specified date—
(a)he shall give a copy of the notice to the funding authority, and
(b)the funding authority shall cease to be under a duty to make maintenance grants to the governing body of the school in respect of any period beginning on or after that date, and shall cease on that date to have the power to pay capital or special purpose grant to the governing body.
(7)In relation to a school in Wales before the Schools Funding Council for Wales have begun to exercise their functions, this section and section 273 shall have effect as if subsection (6)(a) above and section 273(4) and (5) were omitted.