5 Public Sector


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5 Public Sector

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