Public sector of the economy

Public enterprise

The public sector of the economy offers many goods and services to the consumer, some of which are financed entirely by money the government obtains from taxes or by borrowing and which are offered to the consumer free of direct charge at the point of use. Other goods and services are offered in return for payment. Usually the state owns the capital and land required for production, employing the necessary labour. Sometimes the state rents land and borrows money. In general these resources are used to produce goods and services that it is believed the private sector cannot or will not produce efficiently. The state can be involved in business in a number of ways:

• by owning shares in a public or private company. In this case the business will be funded and operated according to normal commercial criteria.

• by providing services such as health, pricing, defence, social security and advice to trade and industry. The finance for these services comes from taxation, the community charge, the business rate and government borrowing.

• by establishing, by Act of Parliament, a public corporation.

Public corporations

Like registered companies, a public corporation is a separate legal entity. It has been incorporated. British Rail is the type of public corporation usually referred to as a nationalised industry. Others, such as the water authorities, are sometimes called public utilities. Each nationalised industry was established by an Act of Parliament. However, there are basic similarities in their legal organisation.

1 A government minister is responsible for establishing the policy of the industry. Overall objectives are likely to be decided by the government. A company will have profit, marketing, social and other objectives decided by its board of directors. The profit objective may not be the most important for a nationalised industry. Nationalised industries have now been given a target to reach. This is expressed as a percentage return on capital employed. In a year they are expected to cover costs and make a ‘profit’.

2 Each public corporation has a board. This is a group of people appointed by the minister responsible for the industry and drawn from the industry itself, the private sector and trade unions. The board interprets the general policy guidelines laid down by the minister.

3 There is a consumer organisation which looks after the interests of the customers. Nationalised industries are monopolies. That is they are sole providers of a good pr service. The customer has no alternative but to use that business, therefore the customer needs protection.

The debate as to whether or not nationalised industries are good or bad for the economy and people tends to be fought on political grounds.

1. Formulate the main idea of the text.

2. Find in the text English equivalents of these words and phrases.

отримувати гроші від податків чи позики	14. ставка, тариф	27. профспілки
прямі витрати	15. урядова позика	28. тлумачити
у відповідь	16. державна корпорація	29. загальна директива
наймати в оренду землю	17. окрема юридична або фізична особа	30. організація захисту прав споживачів
позичати гроші	18. бути зареєстрованим як корпорація	31. піклуватися про інтереси споживачів
займатися бізнесом	19.націоналізована промисловість	32. монополії
володіти акціями компанії	20. комунальні послуги	33.одноосібний постачальник товарів чи послуг
фінансувати, вкладати капітал	21.парламентський закон	34. не мати альтернативи
відповідно до нормативних критеріїв	22. основна схожість, подібність	35. захист, оборона
охорона здоров’я	23. загальна мета	36. дискусія, дебати
поліція	24. рада директорів	37. вести боротьбу політичними засобами
оборона	25. рада
соціальне забезпечення	26. бути призначеним

3. Are these statements true or false? Correct the false ones.

1. Public sector of the economy offers different kinds of goods and services to the consumers.

2. The state sometimes owns the land and capital needed for production and hire the necessary labour.

3. Public sector of the economy is not necessarily financed by the government.

4. Public company is a company whose shares you can buy on the stock exchange.

5. Public corporation is a business that is run by the government.

6. Every public corporation has a board.

7. The board interprets the general policy of the corporation.

8. A consumer organisation has the right to look after the interests of the customers.

9. Nationalised industries are the sole providers of a good or service.

4. Answer the questions.

1. What are two differences between the public and private sectors of industry?

2. Why is it useful to distinguish between the public and private sectors?

3. In what ways would a business in the public sector resemble an enterprise in the private sector?

4. Why does the fact that nationalised industries are monopolies cause some concern?

5. Write a summary of the text.

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