The Public Sector and Privatisation

The Public Sector

http://kids.direct.gov.uk/resource_areas/html/slideshows/town_hall.htm

The Public Sector is that part of the economy that is owned and controlled by the government.

It is funded by taxpayers.

http://kids.direct.gov.uk/resource_areas/html/slideshows/town_hall.htm

You might not think of yourself as a taxpayer, but 17.5% of almost everything you spend is Value Added Tax. That money will eventually end up in the Treasury.

State schools are examples of organisations in the Public Sector.

So are hospitals in the National Health Service - NHS

Try and think of some others.

Most Public Sector Organisations provide services that the government believe are needed for the benefit of the UK.

It would prove difficult or unethical to charge people for their individual use of these services.

Before fire brigades such as this one, people had to pay to have a fire put out. If you couldn’t afford it, the fire was left to burn!

Social objectives are important to these organisations, for example to provide a service to remote communities.

The Public Sector and Privatisation

Privatisation

There used to be many more Public Sector organisations in the UK than there are today.

In 1981 The Government began selling off public sector organisations to private individuals by selling shares in them (privatisation) There were major flotations…

Major flotations of public sector organisations:

•British Petroleum 1983

•Jaguar and British Telecom 1984

•British Gas 1986

•British Airways and Rolls Royce 1987

•British Steel 1988

•Water & Electricity Boards 1990-91

•British Rail 1996

The reasons given for privatisation were that it would:

• Improve government finances.

• That it would improve the efficiency of these firms as a result of more competition in the private sector.

• It was also hoped that it would encourage more people to buy shares.

What happened to firms after privatisation?

• Changes were made to increase efficiency.

• Firms faced competition.

• Profit became the most important objective for privatised firms.

• £60 billion was raised from share sales between 1981 &1996.

The pictures and data about actual privatised firms were taken from an IFSL Report on privatisation. This is on the Internet and is well worth a read.

Picture of old fire engine is reproduced from the San Francisco Fire Brigade web site.