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1.1 NATURE & ORGANIZATION OF BUSINESS . HIGHER LEVEL (HL). PUBLIC & PRIVATE ENTERPRISE (p17). Organizations in the public and private sectors are not mutually exclusive – they do work together at times.
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1.1 NATURE & ORGANIZATION OF BUSINESS HIGHER LEVEL (HL)
PUBLIC & PRIVATE ENTERPRISE (p17) • Organizations in the public and private sectors are not mutually exclusive – they do work together at times. • Sometimes they work together on one-off projects like building a new road and renting it out to motorists to use by paying a toll. • The two major concepts to understand are: • Public / Private Partnerships (PPP) • Private Finance Initiative (PFI)
Pubic Private Partnerships (PPPs) • Any collaboration between pubic bodies such as local authorities or a central government and private companies tends to be referred to as a public private partnership (PPP)
PPPs in the UK • The UK government believes that private companies are often more efficient and better run than bureaucratic public bodies. • Since the early 1990s in trying to bring the public and private sector together, the government has hoped that the management skills and financial acumen of the business community will create better value for taxpayers.
Private Finance Initiatives (PFIs) • Government and local authorities have always paid private contractors to build roads, schools, prisons and hospital out of tax payer money. • However, in 1992, the UK government developed a system whereby contractors would pay the initial bill for construction costs and then rent the finished project back to the public sector.
