5In Part I of Schedule 1 (the needs element)—
(a)after paragraph 1 there shall be inserted the following paragraph—
“2(1)Notwithstanding the provisions of paragraph 1 above, the Secretary of State may, as respects any year, make provision for the apportionment of a prescribed part of the needs element among authorities incurring extraordinary expenses, by reference to so much of the estimated extraordinary expenses of each such authority as he may determine to be appropriate to be taken into account for the purposes of this paragraph.
(2)In this paragraph " extraordinary expenses " means expenses of such categories and for such purposes as the Secretary of State, after consultation with such associations of local authorities as appear to him to be concerned, may determine should be supported by an apportionment under this paragraph ; and in determining the amount of the estimated extraordinary expenses of an authority to be taken into account for any year, the Secretary of State—
(a)shall have regard to the expected income of that authority for that year; and
(b)may have regard to the extent by which the extraordinary expenses for a previous year exceeded or fell short of the estimated extraordinary expenses of the authority for that year.”;
(b)in paragraph 3, for the words " the foregoing paragraphs " there shall be substituted the words " paragraph 1 above " and at the end there shall be added the words " or of a prescribed amount of the needs element to such classes of authorities or to any such authority as may be prescribed. ".