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Public Sector

Public Sector. 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. 3 major elements.

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Public Sector

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  1. Public Sector

  2. 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.

  3. 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)

  4. 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, Scottish Futures Trust, David MacBrayne Ltd, Caledonian Marine Assets Ltd (CMAL)

  5. 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

  6. 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

  7. Private corporation/ company Public corporation Shareholders The govt for the people Who owns it? Govt minister Board of directors Who makes major policy decisions? Managing Directors and managers Chairperson and managers Who makes the day-to-day decisions? Stop purchasing, complain to Industry Consumer Council or MP Stop purchasing, complain to consumer association How can the public make its dissatisfaction felt

  8. Local Authorities • 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

  9. TASK • Distinguish between a public sector organisation and a plc. (4)

  10. 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)

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