The Public Sector

The Public Sector

• This is any organisation owned and run by the government.

The main purpose is to provide goods and services that are considered to big or too important for the security or the general welfare of the country to be left to private people.

Examples of the Public Sector

• BBC

• Post Office

• NHS

Features of Public Sector goods and services

• Public Goods• Non-rivalry – consumption of the good by one

individual does not reduce the amount available for others e.g. street lighting

• Non-excludability• Should be impossible to exclude anyone from

benefiting from it

Local Authority Services• Education• Recreation- sports halls, libraries, swimming pools• Housing- council housing, homeless shelter• Environment and Conservation- Litter clearance, pest

control• Communications- to isolated villages, including roads

and traffic control• Protection- fire and police• Social Services- social workers, community care,

meals on wheels

Where does the money come from?

• Central Government grants

• Council Tax

• Usage charges for recreational use

Why local authority controlled not central government?

• Too much for central government to control• Local authorities should be more in tune with

the differing needs of the local community• Local councillors are accountable to the local

electorate

QUANGO’s

• Quasi- autonomous non government Organisations

• Politically non-controversial activities are carried out by Quangos

• E.g. IIP• HE Funding Council

Nationalisation

• Where a company that used to be run by the Private Sector, becomes government run.

• Generally for the following reasons:– Political – National Security– Failing Industries– Natural Monopolies– Providing a service to the public

Examples of Nationalisation

• The Bank Of England – Nationalised in 1946 to have a special role in the monetary system.

• In 1997 was given power by the government to decide what the level of interest rates should be in the UK

• It is headed by a governor who is answerable to the Chancellor of the Exchequer

Privatisation

• Where organisations that used to be run by the state are sold to private companies.

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Reasons For Reasons Against

-Puts control of industry in private hands

-Encourages more people to own shares

-Increases efficiency by introducing competition

-Reduces Government subsidies

-Political – State control is not desirable in business

- Private sector decision making is much faster than government

-Monopolies are created

-Private industry is not interested in providing non-profitable services for social benefit

-Private companies may not be able to afford the investment needed

-Competition is wasteful as resources are duplicated

-Profits go only to the wealthy few who can afford shares

-More efficiency = greater job losses.

Case Study Activity• 4 People died in a train crash in England in 2002 due to a

broken track.

• Some people said the crash would never have happened if the railways had never been privatised.

• Privatisation introduced many smaller companies to a network that had previously been run by the government. This means that the small companies could easily blame each other and would not take responsibility.

• Companies are more interested in making a profit than with safety.

• Should the Health Service be in the public sector or the private sector?

• Write a mini report about the Health service in your country, say whether it is private or public and give the advantages and disadvantages of it changing ownership.