1:4 Public Sector Ownership

Question 1

What does public sector ownership mean?

Answer 1

A business which is owned by the country as a whole and run on behalf of the people. The government takes over the running and control of the vital activities, e.g., law, defence, health service.

Question 2

What is a Public Sector Corporation?

Answer 2

Public corporations are government controlled market bodies. They produce goods and services for sale and at least 50% of the income comes from sales.

Question 3

Why does the government nationalise industries?

Answer 3

• Some services are required but are too expensive to provide
• Nationalisation can prevent large monopolies from existing
• If the business is failing, the government can take it to save jobs
• Might be wasteful to have so many services.

Question 4

What are the aims of Public Corporations?

Answer 4

They provide a service and are expected to break even, i.e. not to make profit.

Question 5

Who controls Public Corporations?

Answer 5

• Government has the overall control and appoint a government minister to take responsibility.

Question 6

How do Public Corporations get capital and how do they make profit?

Answer 6

• Can get grants from the treasury
• Corporations can borrow from the treasury
• Any profits made can be put back into the business
• Make profit from charging for their services.

Question 7

What are the advantages of Public Corporations?

Answer 7

• Government ensures the essential services are provided
• Services aren’t duplicated and resources wasted
• Profit made benefits tax payers by reducing taxation.

Question 8

What are the disadvantages of Public Corporations?

Answer 8

• Very large, which can lead to inefficiencies, e.g. staff demotivation
• Difficult to motivate staff in an impersonal organisation
• If they make a loss, people will be taxed more
• Running of the corporation could be politically influenced.