The Public Sector

So far all of the businesses that you have looked at have been privately owned. This means that individuals own them. Many businesses are owned by the government and are part of what is known as 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 certain 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 baths 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 the industries 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 in which they were sold to the private sector.

There are a number of reasons why the government privatised many businesses:

• Some of the businesses were losing large amounts of money. These loses had to be paid for out of taxpayers' money and the population was not happy about this.
• Some of the businesses were not 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 they would have to be far more efficient otherwise they would go bankrupt.
• Under government control some of the businesses were monopolies, meaning that they were the only company selling that product 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.

Liability of the Public Sector

For 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.