The Public Sector (AQA A Level Business) : Revision Note

Written by: Lisa Eades

Reviewed by: Steve Vorster

Updated on 8 May 2025

Public services

The public sector is made up of organisations run or owned by the government or local authorities
- In the UK, more than 6 million people are employed in the public sector, delivering a range of services such as healthcare, education, policing and social services

Governments are likely to retain ownership of organisations in the public sector for several reasons
- They are strategically important to the country
  - E.g. defence or justice systems
- They provide essential services
  - E.g. water or electricity supply
- They are merit goods that may not be provided in sufficient quantities by private businesses
  - E.g education or health services
Public services are usually funded through taxation, though in some cases, they make a small charge

Public service	Explanation	How it is funded
Health	Hospitals, GP surgeries, dental services, occupational and mental health services	Mainly general taxation Prescriptions and dental charges contribute a small share
Education	Local-authority schools, academy trusts and FE colleges	Grants from the Department for Education
Justice and policing	Courts and tribunals, police, prisons and probation services	Home Office or Ministry of Justice budgets Some court fees are collected
Household and business waste	Recycling sites and facilities, household waste collection, town centre cleansing	Local council taxes One-off charges for removal of large items Fines issued, e.g. for fly tipping

Public corporations are organisations the government owns but that trade like businesses, earning most of their money by selling goods or services
- Public corporations allow the government to keep control of services that have a clear public interest but are best run in a commercial way

Example	Explanation
BBC	Runs BBC One, Radio 1, BBC iPlayer and more, providing impartial TV, radio and online content across the UK and worldwide
Network Rail	Owns, builds and maintains Britain’s rail tracks, signals and many large stations, making sure passenger and freight trains can run safely each day.
Ordnance Survey	Acts as Great Britain’s national mapping agency, creating highly detailed digital maps and location data used by government, businesses and the public

Over time, many public corporations have been privatised
- E.g. In 2008, the UK government nationalised Northern Rock, a bank which was on the verge of collapse as a result of the global financial crisis
Some privatised businesses are highly successful businesses operating in competitive markets
- Both British Airways and BT were privatised in the 1980s and are highly-regarded, profitable businesses
In other cases privatisation has been less successful
- UK water companies such as Southern Water continue to operate as monopolies
- In recent years they have been criticised for charging high prices and causing environmental damage

the (exam) results speak for themselves:

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