1. Handout 3: Public and voluntary sector organisations
PowerPoint presentation
Unit 320 (B&A 59): Principles of business
Handout 3: Public and voluntary sector organisations

2. They are funded from public taxes.
Public sector funding
Public sector organisations do not have the facility to ‘make a profit’.
They are funded from public taxes.
These taxes may be central or local taxes.
The main difference between private and public sector organisations lies in how they are financed.
The services they provide are funded by the government largely from public taxes.
These taxes may be in the form of central taxes such as income tax, VAT, road tax, Stamp Duty, duty on petrol, tobacco, alcohol, etc; or local taxes such as business rates or council tax.
Additionally, organisations may receive funds from government as a result of borrowing or monies received for specific activities from the European Union.
By meeting special conditions, they may be able to apply for grants from the Treasury via the relevant government department.
Local authorities also have the option of raising revenue through car parking fees or hiring of leisure facilities, etc.

3. Transparency
The public has a right to know how public sector organisations spend their money
Promotes efficiency
As the funds for public sector organisation are public money, the public has a right to know that those funds are being spent correctly and as they would wish.
As public sector organisations do not operate using funds they have raised themselves, but rather funds raised from the public, it vital that they do not waste money and that all their resources are used effectively.
Every public sector organisation therefore has a duty to spend public money effectively, ensuring the best use of their resources, behaving in an environmentally-friendly way and contributing to sustainable economies and communities.
This is known as ‘transparency’ and is a powerful way of promoting efficiency as taxpayers are able to see how their money is spent.

4. Types of public sector organisations
NHS Health organisations – hospitals, doctors’ surgeries, clinics
State education organisations – schools, colleges
Local authorities (councils), eg London Borough of Ealing
Government departments, eg Department for Health
Non-ministerial departments, eg the Foods Standards Agency
Executive agencies that operate as separate organisations, eg The Met Office and HM Land Registry are both executive agencies within the Department of Business, Innovation and Skills (BIS)
Non-Departmental Public Bodies (NDPB) – quangos – eg The Health and Safety Executive

5. Report to the Secretary of State for Communities and Local Government
Local authorities
Report to the Secretary of State for Communities and Local Government
Responsible for the running of local areas
There are several types:
County and district councils
Unitary authorities
Town and parish councils
Local Authorities report to the Secretary of State for Communities and Local Government and are responsible for the running of local areas.
County and district councils - County councils cover large areas and provide most public services, including schools, social services, and public transportation. District councils cover smaller areas within the county and provide more local services, including council housing, gyms and leisure facilities, local planning, recycling and rubbish collection.
Unitary authorities - In most large towns and cities, there will be just one level of local government called a 'unitary authority' responsible for all local services instead of the two-tier system of County and District countils.
Town and parish councils – Exist in some parts of England and Wales covering small areas and with responsibility for eg allotments, public toilets, parks, war memorials, and local community centres.

6. Government departments
Central government is separated into separate government departments.
Government departments are headed by a Secretary of State or other senior minister.
Examples of ministerial departments are:
Cabinet Office
Department for Health
HM Treasury
Ministry for Defence
The organisation of Central Government is separated into separate Government departments.
Most Government departments are headed by a Secretary of State or other senior minister and the structure of these departments tends to reflect what functions the Minister has to oversee.

7. Non-ministerial departments
Examples of non-ministerial departments are:
Charity Commission
Food Standards Agency
HM Revenue & Customs
Office of Fair Trading
Some departments are known as ´Non-ministerial´ which means they are not headed directly by a Minister but rather by a board, answerable to Parliament.

8. Executive agencies Under control of government departments
Have a defined business function
Operate almost like a separate organisation from the main department
Examples of executive agencies are:
Highways Agency
HM Court and Tribunal Service
Identity and Passport Service
Jobcentre Plus
UK Border Agency
A department usually has executive agencies under it.
These have a defined business function and are headed up by a Chief Executive (often supported by a Management Board).
They operate almost like a separate organisation from the main department.
Whilst the ministers are not directly involved with the day to day running of executive agencies, they are ultimately responsible for their performance to Parliament and the general public.
Departments and executive agencies are staffed by civil servants who are ultimately accountable to Parliament through the relevant departmental Minister.

9. Non-departmental public bodies (NDPBs)
Functions:
Executive
Advisory
Examples of executive NDPBs are:
Competition Commission
English Heritage
Environment Agency
Health and Safety Executive
Examples of advisory NDPBs are:
Advisory Council on the Misuse of Drugs
Committee on Standards in Public Life
Pay Review Bodies
Aside from government departments and executive agencies, there also exist both advisory (ie to advise on policy) and executive (ie to carry out policy).
Executive NDPBs carry out a wide range of administrative, commercial and regulatory or technical functions which are considered to be better delivered at arm’s length from Ministers.
Again, they are directly accountable to Ministers and, in turn, to Parliament and the public for their performance.
They are usually headed by boards and the board members are usually appointed by Ministers.
The board usually appoints a Chief Executive Officer (CEO) with day-to-day responsibility for managing the body.
The CEO, and staff, are not usually civil servants

10. Public sector legislation
Local Government Act 2000
Sustainable Communities Act 2007
Education and Skills Act 2008
Clean Neighbourhoods and Environment Act 2005
Local Government Act 2000
The principal purposes of this Act are:
to give powers to local authorities to promote economic, social and environmental well-being within their boundaries
to require local authorities to shift from their traditional committee-based system of decision-making to an executive model with a cabinet of ruling party group members
to create a separation of functions with local authorities, scrutinised by backbench councillors
to introduce a revised ethical framework adopting codes of conduct and various standards for local authorities.
The Act aims to deliver greater efficiency, transparency and accountability of local authorities and to ensure that decisions can be taken more quickly and efficiently than in the existing committee system with the individuals or bodies responsible for that decision-making more readily identifiable by the public.
Sustainable Communities Act 2007
The principal aim of the Act is to promote the sustainability of local communities. This means to try to combat the on-going loss of local facilities and services, such as shops, markets, Post Offices, bank branches, health centres, etc that make an area a good place to live in. It allows for a local authority to make proposals to the Secretary of State which it considers would contribute to promoting the sustainability of its local communities.
Education and Skills Act 2008
This Act raised the minimum age at which a person can leave education or training to eighteen. It applies to any person who is resident in England and who—
(a) has ceased to be of compulsory school age,
(b has not reached the age of 18, and
(c) has not attained a level 3 qualification
and requires that they are either in full-time education or training, undertaking an apprenticeship or, if in full-time employment, are receiving appropriate training.
Clean Neighbourhoods and Environment Act 2005
This Act allows local authorities the power to impose Fixed Penalty Notices (fines) on businesses and individuals for anti-social behaviour in the following areas:
nuisance and abandoned vehicles, including the power to remove abandoned cars from the streets immediately and deal with nuisance parking or repairing a vehicle on the road as part of a business
litter, making it an offence to drop litter anywhere - private land and rivers, ponds and lakes – including cigarette butts and discarded chewing gum
graffiti and fly-posting
waste/fly-tipping
dogs, including dealing with fouling and stray dogs, banning dogs from designated areas, requiring them to be kept on a lead and restricting the number of dogs that can be walked by one person
noise, including dealing with burglar alarms and other noise nuisance.

11. Organisations who aim to raise aid for their stated cause
Voluntary/not-for-profit organisations (the Community and Voluntary Sector
Organisations who aim to raise aid for their stated cause
Voluntary organisations such as the Voluntary Services Organisation
Organisations operating under a charitable status where money is not raised for a cause, but rather invested back into the operation, eg City & Guilds.
Sometimes referred to as the Third Sector, this comprises charity organisations such as Oxfam, whose principal aim is to raise aid for their stated cause or voluntary organisations such as the Voluntary Services Organisation which works in partnership with many public sector organisations, including the NHS.
Voluntary organisations may enter into contracts with public bodies to provide services or they may work with them more informally, referring clients to public services, taking referrals from public bodies or sharing information with them.
Other types of organisations in this sector operate under a charitable status where money is not raised for a cause, but rather invested back into the operation, eg City and Guilds.

12. Charities are registered at the Charities Commission
There are three main charitable entities:
Unincorporated associations
Charitable trusts
Private companies limited by guarantee
Charities are registered at the Charities Commission: The name of the charity is registered, along with the names of the trustees and a governing document submitted which sets out the rules by which it is run. Registered charities also need to register as such with HMRC to access certain tax reliefs and exemptions.

13. Unincorporated associations
The most common form within the voluntary sector
Has a particular purpose
Has a constitution
Officers of the organisation can be personally liable if the charity is sued or has debts
The most common form within the voluntary sector and is a contractual arrangement between individuals who have agreed to come together to form an organisation for a particular purpose.
An unincorporated association will normally have as its governing document, a constitution or set of rules, which will deal with such matters as the appointment of office bearers, and the rules governing membership.
However, it is not a separate legal entity meaning it cannot start legal action, borrow money, or enter into contracts in its own name.
Officers of the organisation can be personally liable if the charity is sued or has debts

14. A relationship between three parties: the donor of some assets
Charitable trusts
A relationship between three parties:
the donor of some assets
the trustees who hold the assets
those people eligible to benefit from the charity.
The governing document is the Trust Deed or Declaration of Trust.
A relationship between three parties: the donor of some assets, the trustees who hold the assets and those people eligible to benefit from the charity.
The governing document is the Trust Deed or Declaration of Trust, which comes into operation once it is signed by all the trustees.
As with the unincorporated associations, it has no separate legal status and its trustees have liability.

15. Private company limited by guarantee
Has members who act as guarantors instead of shareholders.
The guarantors give an undertaking to contribute a nominal amount in the event of the winding up of the company.
Common uses of companies limited by guarantee include clubs and membership organisations, charities (eg Oxfam).

16. The Charity Act 2011
Main legislation affecting voluntary sector organisations
Sets out the conditions an organisation must fulfil in order to have charitable status