3.—(1) None of the activities mentioned in section 2(2) of the Act shall be treated as a defined activity so long as the condition mentioned in paragraph (2) is fulfilled.
(2) The condition mentioned in paragraph (1) is that the amount estimated by the authority as the gross cost of carrying out the activity in question through their direct labour organisation or a similar organisation in the immediately preceding financial year does not exceed £100,000.
(3) For the purposes of this article, the cost of carrying out any activity shall—
(a)include such proportion of the authority’s administrative expenses, other than expenses that would be incurred by the authority whether the activity were carried out by it or by another person, as is properly attributable to the carrying out of the activity;
(b)exclude the cost of any work which is treated as carried out by the authority by virtue of section 3(4) of the Act; and
(c)exclude the cost of any work which, by virtue of article 4, 5 or 6, does not fall within a defined activity.