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The definitional debate centres
round the role of the ‘not-for-profit’ sector, and the way in which
services, which until now might be delivered by the public sector are to
be delivered in the future. There is no clear agreement between the
eight cities about what should be considered ‘private sector’.
Some would regard the
not-for-profit sector, which is independent of government – even if
partially funded by it – as part of the private sector, while others
have commented that these businesses are simply undertaking the work
that the public sector normally carries out. Is it part of the private
sector or not? Berlin put it ‘the public sector is composed by core
institutions and a dependent network of NGOs, Quangos or private
companies, who are working predominantly for the public sector.’
For Vilnius the non-profit
sector is ‘different from public sector in sense of being structurally
separate from the instrumentalities of government and in not exercising
government authority. Non-for-profit organisation by its nature is ‘non
governmental’. However, when we are talking about just two sectors -
private and public sectors, non profit organisation can be ascribed both
to private and public sector depending on what kind of organisation
(private or public) controls its activity.’
This debate may be important as it highlights a fault
line within European thinking – particularly between the UK and mainland
Europe. The UK historically has had an active ‘not for profit’ or
‘social economy’ sector, which, according to Treasury definitions
relating to borrowing rules that define what is private and what is
public, falls within the private sector. The number of people employed
in this sector is greater than those in manufacturing. The privatisation
reforms of the 1980s and 1990s have given this sector predominance in
regeneration that does not exist – so far – in other European countries.
This includes economic development, rented housing and social welfare
that in most European countries is carried out by the public sector.
Therefore Glasgow considers the not-for-profit sector
as positive factor and as a link to the public sector in terms of
service delivering and a link to the private sector in terms of
methodology being at the same time closer to the community. It is deemed
to be an innovation within urban regeneration and society.
Further comment on the UK approach to this sector is
in appendix 3.
Hamburg suggests that ‘the “not
for profit sector” actually is neither public nor private. With respect
to this in Germany a so-called “third sector” has been established where
all NGOs etc. can be found. …. According to this the 3rd
sector describes a social sector, which distinguishes itself from the
sectors state, market and community, respectively family. We therefore
recommend to assign “not for profit organisations” to this sector.’
They go on to explain the status
of their own company – STEG. ‘Formally STEG is a private company (100 %
private) and is subject to all economic risks of the market and competes
with other intermediate authorities or services. Taking a closer look
STEG carries out tasks on behalf of the city (trustee of real estate
funds and district manager). Therefore, a client-contractor-relationship
exists between STEG and the city: in 95 % of all activities STEG acts by
order of the public sector. STEG, however, can be an investor itself in
developing projects at own risk. In this case STEG can be assigned to
the private sector. In total – the way we see it – STEG is clearly a
private company and is to be assigned respectively’.
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