In my opinion, this provision is intended to cover diagrams in books, or poems included within novels.
Thus an initial question arises as to whether the SPI is a work incorporated in another work. It is subject to the qualification that 'a work which incorporates another work is to be treated as a single work'. The provision does indeed have a limit of 5%, but this applies to a work, and not to a book. Section 36 of the 1988 Act then allows the copying of extracts of a work in certain circumstances. The first requirement for that defence is that the institution be either a school (an educational institution which is outside the further or higher education sectors and which provides primary or secondary education or both) or an establishment specified by the Secretary of State for the purposes of the educational use infringement exceptions. The Copyright, Designs and Patents Act 1988 provides a defence to copyright infringement for certain educational purposes.
'As an educational institution, we are permitted to copy the SPI as it constitutes less than 5% of the contents of the Book.'