Publicly owned organisations

From WikiTextbook

So far all of the businesses that you have looked at have been owned privately. This means that individuals own them. Many businesses are owned by the government and are called the public sector. The government may choose to own a particular business for many reasons, the main ones are:

• The government may not trust private individuals to run certain services, for example, the Police, the Royal Navy, the Royal Air Force and the Army.

• The government believes all people have the right to some services. If they were owned privately they would only be provided to those who could pay for them, for example, health services and education.

• Some services such as parks, swimming pools and street lighting are not profitable so private businesses would not provide them.

• Industries such as nuclear power are potentially very dangerous so the government may prefer to keep control in order to prevent accidents.

In the United Kingdom the government used to own many businesses, but now the public sector is quite small as most of them have been sold to the private sector. Below is a list of some of the companies that the government used to own and the year that they were sold to the private sector.

1979 BP

1981 British Aerospace, Cable and Wireless

1984 Sealink Ferries, Jaguar cars, British Telecom

1986 British Gas

1987 British Airways, Rolls Royce

1988 British Steel

1989 The water companies

1990 The electricity companies

1994 British Coal

1995 British Rail

1996 Railtrack

The process of selling public businesses to the private sector is called privatisation. There are a number of reasons why the government privatised many businesses:

• Some of the businesses were losing large amounts of money. These losses had to be paid for out of taxpayers money and some of the population was not happy about this;

• Some of the businesses were accused of not being very efficient as they did not have to make a profit because they knew the government would pay for any losses. In the private sector, it was argued, they would have to be far more efficient otherwise they would go bankrupt;

• Under government control some of the businesses were monopolies, meaning they were the only company selling that good or service. In some cases when the government privatised the business they also introduced competition in the hope that it would lower prices as companies fought to get customers.

There are still a large number of business still in the public sector, examples are the BBC, the national health service, schools, council housing, parks, the armed forces, the post office and air traffic control. It has been suggested that the government is considering privatising the post office and air traffic control in the future.

Liability of the public sector

In a business in the public sector, liability is not really an issue as the government can always raise taxes or borrow more money should it need to pay off a debt.