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Regulation 12(2)
1. Before determining the amount of the aggregate non-core spending obligation for a scheme year, the Secretary of State must estimate the aggregate amount of benefits (if any) to be provided by scheme suppliers under Part 3 in that scheme year (“the core group spending estimate”).
2. The amount of the aggregate non-core spending obligation for a scheme year (“year t”) is to be T – E where—
T is the overall spending target for year t; and
E is the core group spending estimate for year t.
3. The overall spending target is—
(a)£250 million for scheme year 1; and
(b)subject to any adjustments under paragraphs 4 to 6, £275 million for scheme year 2;
(c)subject to any adjustments under paragraphs 4 to 9—
(i)£300 million for scheme year 3; and
(ii)£310 million for scheme year 4.
4. Before determining the amount of the aggregate non-core spending obligation for scheme year 2, 3 or 4, (“year t”), the Secretary of State must—
(a)review the core group spending estimate for year t-1; and
(b)increase or reduce that estimate, if it appears to the Secretary of State that the aggregate amount of benefits provided under Part 3 in year t-1 will be greater or less than the estimate.
5. If the Secretary of State increases the core group spending estimate for year t-1, the overall spending target for year t is to be reduced by a corresponding amount.
6. If the Secretary of State reduces the core group spending estimate for year t-1, the Secretary of State may increase the overall spending target for year t by an amount not exceeding the amount of that reduction.
7. Before determining the amount of the obligation for scheme year 3 or 4 (“year t”), the Secretary of State must (in addition to the steps in paragraph 4 to 6) calculate the difference between—
(a)the aggregate amount of benefits provided under Part 3 in year t-2 (“At-2”); and
(b)the core group spending estimate (with any increase or reduction previously made to it) for year t-2 (“Et-2”).
8. If At-2 is greater than Et-2, the overall spending target for year t is to be reduced by an amount corresponding to the difference between At-2 and Et-2.
9. If At-2 is less than Et-2, the Secretary of State may increase the overall spending target for year t by an amount not exceeding the difference between At-2 and Et-2.
10. In this Schedule—
“year t-1” means the scheme year preceding the scheme year for which the amount of the obligation is being determined; and
“year t-2” means the scheme year before year t-1.
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