The public and private sector are two halves of a whole which make up the social fabric of the UK. Both permeate nearly every aspect of society in one form or another; from healthcare and education to infrastructure and scientific development.
The “public vs private” debate is one which has raged for a long time in the UK. It has forever been at the centre of public discourse and moulded political rhetoric and economic policy. In turn, this has resulted in dramatic socio-economic shifts which have left their imprint on the lives of millions of people. The changing balance between both sides has come to shape what today we recognise as modern Britain.
Public and private institutions are each embodied by different characteristics. With the exception of non- profit organisations, private sector companies look towards establishing profitable enterprises, without which they cannot stay afloat. In contrast, funding for the public sector comes directly from the government to provide universal benefits to all members of society; from street lighting to the police service.
The private sector
The private sector is best understood as the part of the economy run without government funding. Private institutions look to make a profit by providing goods and services in order to grow their businesses, with different suppliers offering a variety of product choices to customers. This brings competition to the market as private companies often strive to provide a better service than their competitors to attract the most market share. In turn, competition incentivises streamlining and efficiencies within the business itself.
Business decisions are less influenced by political pressure, instead relying upon economic and business incentives. Focus is placed on their ability to raise revenue and investment through innovation. Innovation is key to diversification within the private sector and ultimately key to competitive advantage and market control.
One of the main criticisms of the private sector is that they often operate on an amoral platform given the obligation and desire to maintain continued profitability. Even when decisions prove socially or environmentally harmful, the private sector strives for profit because they are not directly accountable to the public unlike public institutions.
The public sector
Conversely, the public sector acts as the cogs within a nation’s social machinery. It provides crucial amenities like water and electricity, emergency services, education and healthcare whilst generating vital civil service jobs. All are funded and run by the government. Public institutions look to provide universal services to all no matter an individual’s economic situation; essential services are accessible for all. The most obvious examples within the UK include compulsory schooling for children until the age of 18 and the NHS which ensures treatment is free at the point of entry. Although being for the public good, such services may not be directly profitable and so are under-provided by the market.
Many key industries which create natural monopolies are also public institutions. For example, amenities such as the water network is most efficient when run by the government because the fixed costs are so high in creating a network of water pipes, there is no sense in having any competition. A private natural monopoly providing water could easily exploit this situation and set higher prices to consumers making the service unaffordable for most of the population. Government control of natural monopoly prevents this exploitation of monopoly pricing.
In consideration of both sectors, most people would agree that the best form of society is one where there is a careful balance. Where thriving private enterprise generate investment and innovation alongside public institutions that supply accessible public services to all; together enhancing society’s development and wellbeing. The co-existence of the public and the private sector should collectively aim to maintain social, economic and work security to both current and future generations.