The Nature of Public Sector Business

Understanding the Public Sector

The public sector refers to the part of the economy concerned with providing various government services.
Includes services such as maintaining law and order, defence, public administration, healthcare and education.
Run by local and national government on behalf of citizens.
Funded through taxation.
Meant to serve public interest and is not driven by profit motives.

Public vs Private Sector

The public sector is different from the private sector, which comprises businesses owned by individuals or companies.
The focus of the public sector is on providing services not on making profit, while the private sector aims for profit maximisation.
Accountability in the public sector is to the taxpayers, while in the private sector it is to shareholders.

Types of Public Sector Organisations

There are several types of public sector organisations, including government departments, non-departmental public bodies, public corporations, local authorities, and NHS trusts.
Government departments are responsible for implementing policies and providing services in their area of responsibility.
Non-departmental public bodies (NDPBs) - sometimes referred to as quangos - perform specific tasks that require expertise.
Public corporations are government-owned entities that operate in the commercial sector.
Local authorities provide local services, including education, social services, and housing.
NHS trusts are responsible for running hospitals and health services.

Managing Public Sector Businesses

Public sector organisations are overseen by government ministers, who set their overall policy and budget.
They’re managed on a day-to-day basis by civil servants, who are employed by the state.
There’s an emphasis on transparency and accountability in public sector management. They are accountable to the public and to parliament.

Challenges Facing the Public Sector

Public sector businesses face specific challenges, including the need to be efficient with limited resources and the need to meet political objectives.
They’re required to improve service quality while managing budget cuts.
They also face scrutiny from the public and politicians, and the challenge of managing competing demands and interests.