Public ownership

Public ownership refers to any service or industry owned by the state, for example:

• National Health Service
• Emergency services
• Armed forces
• State education

Central government [Central government: Controlled by parliament. ] controls these organisations. Their main aim is to provide essential services for the whole population. They are not profit making, and the general public pays for these services through taxation. Some services are the responsibility of local government [Local government: Controlled by local councils. ], such as refuse collection and the maintenance of parks.

There are arguments for and against public ownership. First look at the advantages:

• Jobs - Usually protected, reducing unemployment.
• Resources - Key supplies, eg water and energy, can be guaranteed and controlled.
• Essential services - Health, education, housing and transport are guaranteed for everyone.

The main argument for public ownership is that the whole population benefits rather than just those who can afford to pay privately. Before the creation of the National Health Service, for example, you had to pay to see a doctor. Today we pay through taxation, but those who earn less, pay less and the unemployed are provided for.

Now look at the disadvantages of public ownership.

• Higher costs - Providing these services means higher costs, and higher taxes.
• Inefficiency - Large non-profit making organisations suffer from diseconomies of scale
• Governement interference - Politicians' interference can negatively affect the efficiency of an organisation

The main argument against public ownership is its cost. This cost is called the Public Sector Borrowing Requirement and is funded by taxation, either directly through income tax or indirectly through National Insurance. More public services mean a higher tax bill for everybody, including those who may not benefit from them.

Large public sector organisations are bureaucratic. They also often have a monopoly [Monopoly: One organisation having control of a sector of industry. ], and without competition, workers can become unmotivated and inefficient.

During the 1980s, the government decided to privatised [Privatised: Nationalised industry sold by the state. ] most of the nationalised [Nationalised: Private industry bought by the state. ] industries in the belief that the added competition, and profit motive, would improve efficiency, and provide a better value-for-money service for the consumer. Examples are:

• British Gas
• British Steel
• British Airways
• British Telecom

Public services such as transport and refuse collection have been contracted out to private companies or deregulated [Deregulated: Public service opened up to the private sector. ] by local councils.