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5 Public Sector

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  • 1. PUBLIC SECTOR
    • PUBLIC SECTOR ORGANISATIONS - owned by the government on behalf of the people.
    • The government has some form of responsibility for the way in which the organisation is run and managed.
  • 2. 3 major elements
    • direct state participation in industry through public corporations
    • Government departments – Defence, Trade and Industry, Health, Education and Employment, Transport
    • public sector involvement at local council level . (education, recreation, social services)
  • 3. PUBLIC CORPORATIONS
    • industrial or commercial enterprises under direct Government control.
    • have a board whose members are appointed by Ministers, and which meets at least quarterly.
    • employ their own staff, who are not civil servants.
    • manage their own budgets.
    • The Scottish Government is responsible for the following Public Corporations:
    • Scottish Water , Highlands & Islands Airports
  • 4. REASONS FOR A PUBLIC CORPORATION
    • To avoid wasteful duplication
    • To set up and run essential services that might not be profitable
    • To gain the benefits of large scale production
    • To protect employment
    • To control industries that are important to the country
  • 5. Reasons for privatisation
    • To raise large amounts of capital for the treasury
    • Some Public Corporations were poorly managed and a drain on the public purse
    • It was felt that privatisation would make industries more competitive
    • The government wanted to increase share ownership and make the public have an interest in the success of the companies and the economy
  • 6. Local Authorities (councils)
    • Run by elected councillors
    • Managers and employees in each department
    • Provides essential services which might be unprofitable if provided by private firms (Libraries, leisure centres, schools, street lighting)
    • Financed by:
      • Grants from central government
      • Council tax
      • Charging fees for some services
  • 7. TASKS
    • Distinguish between a public sector organisation and a plc. (4)
    • Explain why the government may choose to finance an organisation in the public sector (3)
    • FIND OUT ANY BRITISH PUBLIC CORPORATIONS
  • 8. Public Sector Question – solution
    • Distinguish between a public sector organisation and a plc. (4)
    • A plc is owned by shareholders whereas a public sector org is owned by the government on behalf of the people. (1)
    • The board of directors are elected by shareholders to make decisions in a plc whereas the chairman of a public sector org is chosen by the government. (1)
    • A plc is mainly financed by shares which are bought on the stock exchange whereas a public sector org is financed by the government through taxation. (1)
    • A plc’s main objective may be to profit maximise in order to give shareholders a good return on their investment, however, the main object of a public sector org is to provide the public with an essential service eg NHS. (1)