When I picked up my kids from school I noticed a house close to the school had a CCTV camera pointing at the school gates... illegal? ?

It is there to protect the kids. It is a good thing.

Thankfully, not EVERYTHING is illegal. Nor should it be.  Looking at a school is not illegal.

Unless the kids normally undress at the gates, I don't see anything illegal.  If you stood on the neighbor's sidewalk, you'd see what the camera sees, so it's not a privacy thing.  I don't see anything illegal.

No its not illegal to point cctv at little b@stards 

Maybe the school ask to put it there. 

Perhaps the owner is having trouble with kids on their property or trash or damage.

Why not ask the school first. 

No law preventing the filming of the front of their property. As for the possible sex offender/child molester theory, that’s not a problem because registered sex offenders and known pedophiles are forbidden to live within a certain distance of schools and must notify all neighbors within a certain distance of their status and address they live. Police tend to love that private residences have CCTV cameras and ask for their footage whenever any crimes are committed that they may have captured. 

We don't know where you are, so it's impossible to determine what the laws are. You could call your police department. Generally, there's no reasonable expectation of privacy on a public street or out in public. However, because there are children involved, the police department might be willing to check to see if there are any child molesters in that house. In the US, people convicted of child molestation must register with the police, and you can Google a map showing any in your neighborhood. 

I suspect it's legal for the camera to record what anyone on a public street could see.

After all, lots of businesses have CCTV that's not aimed at their own doors but at the street and sidewalk.