My school 'may exercise its right to...the interception of email' is this a breach of my privacy?:
No, you are using the equipment provided for you as an employee, and the school has the right to ensure that it is NOT being used for any illegal purpose. If you don't like the terms of the contract you sign so that you can use school computers for e mails, then you should just stop using it. They will also monitor the web sites you, or any of the pupils, visit.