H BM - BUSINESS ACTIVITY 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.

H BM - BUSINESS ACTIVITY 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)

H BM - BUSINESS ACTIVITY 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

H BM - BUSINESS ACTIVITY 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

H BM - BUSINESS ACTIVITY 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

H BM - BUSINESS ACTIVITY 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 governmentCouncil taxCharging fees for some services

H BM - BUSINESS ACTIVITY 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

H BM - BUSINESS ACTIVITY 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)