Public sector organisations are owned by the government on behalf of the people and include government departments, public corporations, and local authorities. Public corporations are commercial enterprises under direct government control that employ their own staff and manage their own budgets. Reasons for establishing public corporations include avoiding duplication of services, setting up essential services that may not be profitable, gaining benefits of large scale production, and controlling important industries. Reasons for privatising some public corporations were that some were poorly managed and a drain on public funds, and it was believed privatisation could make industries more competitive.

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)