(1)In relation to each financial year a major precepting authority shall make the calculations required by this section.
(2)The authority must calculate the aggregate of—
(a)the expenditure the authority estimates it will incur in the year in performing its functions and will charge to a revenue account for the year, other than expenditure which it estimates will be so incurred in pursuance of regulations under section 99(3) of the 1988 Act;
(b)such allowance as the authority estimates will be appropriate for contingencies in relation to expenditure to be charged to a revenue account for the year;
(c)the financial reserves which the authority estimates it will be appropriate to raise in the year for meeting its estimated future expenditure; and
(d)such financial reserves as are sufficient to meet so much of the amount estimated by the authority to be a revenue account deficit for any earlier financial year as has not already been provided for.
(3)The authority must calculate the aggregate of—
(a)the sums which it estimates will be payable to it for the year and in respect of which amounts will be credited to a revenue account for the year, other than sums which it estimates will be so payable in respect of redistributed non-domestic rates, revenue support grant or additional grant or any precept issued by it, or in pursuance of regulations under section 99(3) of the 1988 Act; and
(b)the amount of the financial reserves which the authority estimates that it will use in order to provide for the items mentioned in paragraphs (a) and (b) of subsection (2) above.
(4)If the aggregate calculated under subsection (2) above exceeds that calculated under subsection (3) above, the authority must calculate the amount equal to the difference; and the amount so calculated shall be its budget requirement for the year.
(5)In estimating under subsection (2)(a) above an authority which is a county council shall take into account the amount of any levy issued to it for the year but (except as provided by regulations under section 74 of the 1988 Act) shall not anticipate a levy not issued.
(6)For the purposes of subsection (2)(c) above an authority’s estimated future expenditure is—
(a)that which the authority estimates it will incur in the financial year following the year in question, will charge to a revenue account for the year and will have to defray in the year before the following sums are sufficiently available, namely, sums—
(i)which will be payable to it for the year; and
(ii)in respect of which amounts will be credited to a revenue account for the year; and
(b)that which the authority estimates it will incur in the financial year referred to in paragraph (a) above or any subsequent financial year in performing its functions and which will be charged to a revenue account for that or any other year.
(7)The Secretary of State may by regulations do one or both of the following—
(a)alter the constituents of any calculation to be made under subsection (2) or (3) above (whether by adding, deleting or amending items);
(b)alter the rules governing the making of any calculation under subsection (2) or (3) above (whether by deleting or amending subsections (5) and (6) above, or either of them, or by adding other provisions, or by a combination of those methods).
(8)References in this section to expenditure incurred by an authority shall be construed in accordance with section 41(3) of the [1989 c. 42.] Local Government and Housing Act 1989.