Issued August 2007
Public Value Test (PVT):
Guidance on the conduct of the
PVT
2
Contents
Page
1. Summary 3
Purpose of the Public Value Test 3
Summary of the Public Value Test process 3
2. Application of the Public Value Test 6
When the PVT will be applied 6
Criteria for applying the PVT 6
3. Submitting an application 8
Preparing an application 8
Supporting evidence 8
Applications to the Trust 9
4. The Public Value Test process 10
Consideration of an application 10
Launching the PVT 10
5. The Public Value Assessment (PVA) 12
The PVA process 12
Methodology for the PVA 13
Sources of evidence 15
Coordination with Ofcom 16
6. The Market Impact Assessment (MIA) 17
7. Conclusion of the PVT 18
8. Sources of further information 20
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1. Summary
Purpose of the Public Value Test
1.1. The Public Value Test ("PVT") is a key component of the BBC's system of
governance which took effect with the Charter and Agreement on 1 January 2007.1
The PVT must be applied before a decision is taken to make any significant change to
the BBC's UK Public Services.
1.2. The Charter makes clear that the BBC should be able to alter its UK Public Services
­ for example to respond to changes in technology, culture, market conditions and
public expectations. However, proposals from the BBC Executive for significant
changes must be subject to full and proper scrutiny by the BBC Trust. The PVT is the
means by which this scrutiny takes place prior to approval
1.3. The key duties of the BBC Trust ("the Trust") include upholding the interests of
licence fee payers and securing the effective promotion of the BBC's Public
Purposes.2
In exercising these duties the Trust also has a general duty to have regard
to the competitive impact of the BBC's activities on the wider market. The PVT
provides an evidence-based approach for the Trust to take all these factors into
account when considering significant changes to the BBC's UK Public Services.
1.4. This document outlines the process that will be followed by the Trust in conducting a
PVT. It is intended to provide guidance and clarity on the PVT process and has been
produced in light of experience so far. In some circumstances the Trust may decide
to modify the application of aspects of this guidance, where not specifically required
by the Charter and Agreement. In such cases the Trust will explain the steps taken.
This document will be kept under review and amended accordingly.3
Summary of the Public Value Test process
1.5. This document outlines the detailed process that will normally be followed in
undertaking the PVT. In summary:
1 The Royal Charter for the continuance of the British Broadcasting Corporation of October 2006 ("Charter") and An
Agreement between Her Majesty's Secretary of State for Culture, Media and Sport and the British Broadcasting
Corporation of July 2006 ("Agreement"); available at: www.bbccharterreview.org.uk/. Detailed information on the PVT
process is contained in Clauses 23 to 33 of the Agreement
2 The BBC Public Purposes are set out in Article 4 of the Charter and Section 5 of this guidance
3 The requirements of this document are set out in the Trust Protocol D5, available at:
www.bbc.co.uk/bbctrust/framework/protocols/compliance.html. This guidance replaces the Interim rules on the conduct of
the PVT
4
 The BBC Executive must apply to the Trust for approval to make any potentially
significant change to the BBC's UK Public Services.
 The Trust will determine whether the proposals represent a significant change to
the UK Public Services and whether the PVT should be applied.4
 If a PVT is required, the process involves two elements:
o A Public Value Assessment ("PVA"), which assesses the likely public value of
the proposal. This is conducted by the Trust;5 and
o A Market Impact Assessment ("MIA"), which assesses the extent of any likely
impact on markets relevant to the proposed change. This is conducted by
Ofcom.6
 The Trust will consider the outcome of the PVA and MIA, both of which will be
published, and reach provisional conclusions regarding the proposed change.
 The Trust will consult on its provisional conclusions before reaching a final
conclusion on the proposed change. The Trust must be satisfied that any likely
adverse impact on the market is justified by the likely public value of the change
before concluding that the proposed change should be made.
 The PVT process must be completed within six months of the date on which the
Trust determines that it is to be applied. Where justified by the circumstances, the
Trust, in its discretion, may allow a longer period for completion of the PVT.
1.6. This process is summarised in Diagram 1 overleaf.
4 The Trust can delegate authority to the PVT Steering Group, a sub-committee of the Trust, to decide whether a PVT
should be applied and to carry out other related tasks. Section 5 provides further details.
5 The Trust is supported by the Trust Unit in this task. The Trust Unit is a separate team responsible for supporting and
assisting the Trust and is administratively separate from the rest of the BBC's organisation. The Trust Unit also assists
the Trust in the administration of the PVT process.
6 Ofcom is the regulator for the UK communications industries.
5
Diagram 1: Summary of the PVT process
BBC Management submit formal application
(plus supporting evidence)
Public Value Assessment
(BBC Trust)
Market Impact Assessment
(Ofcom)
Public Value Test
(BBC Trust)
Trust consults on
preliminary conclusions (normally 28 days)
Final decision
6 months
Public Representations Public Representations
BBC Trust considers if PVT should be applied
3 months
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2. Application of the Public Value Test
When the PVT will be applied
2.1. The Trust is required to apply the PVT before a decision is taken to make any
significant change to the BBC's UK Public Services. This can include introducing a
new service or discontinuing an existing service.
2.2. The Trust is not required to apply the PVT to other "non-service" activities.7
However, the Trust may still decide that it would be appropriate to apply a PVT in
certain cases. This guidance will be applicable in such instances.
2.3. For these purposes the BBC's UK Public Services refers to all the services provided
by the BBC in promoting its Public Purposes. It includes all the BBC television and
radio channels broadcast in the UK and the BBC's online services. It excludes any
services which are:
* Commercial services
* Form part of the BBC World Service
* Services performed at the request of, and funded by, any Department of Her
Majesty's Government in the UK
* Aimed primarily at users outside the UK
2.4. Each of the BBC's UK Public Services is also governed by a service licence. Service
licences contain a description of the characteristics of the service, including its remit,
scope, aims and headline budget.8
Criteria for applying the PVT
2.5. Whether any proposals for change meet the criterion of significance is a matter of
judgment for the Trust. In exercising that judgment the Trust must have regard to
the following considerations:9
a) impact ­ the extent to which the change is likely to affect relevant users and
others;
7 Clause 22 of the Agreement provides further detail on non-service activities
8 A full list of the BBC's UK Public Services and a description of Service Licences can be found at:
www.bbc.co.uk/bbctrust/framework/bbc_service_licences/index.html
9 Agreement, Clause 25(2)
7
b) the financial implications of the change;
c) novelty ­ the extent to which the change would involve the BBC in a new
area of activity, as yet untested; and
d) duration ­ how long the activity will last.
2.6. In addition, the Trust should presume that any change which requires a new service
licence or any amendment of the key characteristics described in a service licence
ought to be subject to a PVT. Where this presumption applies, the Trust may still
decide that there is no need for the PVT to be applied, but the Trust must justify its
reasoning in departing from this presumption.10
2.7. If a change to a service or new service is approved following the PVT, the terms of
the approval will be contained in the relevant service licence(s). A further PVT would
not be required unless the BBC Executive proposes a further significant change to
that service.
2.8. The Trust can decide that a PVT should be applied to any sufficiently significant
change to a UK Public Service that was not formally notified to the Trust before the
change was made. These are expected to be exceptional circumstances and the Trust
might consider it appropriate to suspend the service pending the completion of the
PVT.
10 Agreement, Clause 25(3)
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3. Submitting an application
Preparing an application
3.1. The PVT will generally be applied in response to an application from the BBC
Executive. The BBC Executive is responsible for seeking approval for any potentially
significant changes it wishes to make to the UK's Public Services and for coordinating
and submitting all such applications to the Trust.
3.2. For planning purposes the Trust should be kept updated on the progress of all
potential applications. Applications should normally be separated by 6-8 weeks.
Supporting evidence
3.3. Proposals for a significant change must be supported by appropriate evidence. This
evidence will be considered by the Trust and Ofcom in assessing the proposal. The
Trust will seek to agree the evidence base with the BBC Executive in advance of any
application to ensure that sufficient evidence is provided.
3.4. The BBC Executive is required to submit the following documents to the Trust
before collecting the evidence to support an application:
* Service Proposal ­ providing an outline of the proposed change. This provides a
framework for determining research requirements and should include:
o a summary of the new service or proposed change, including its aims,
objectives and potential scale;
o a brief outline of the strategic rationale for the proposal; and
o an indicative timetable of service launch.
* Research Terms of Reference ­ outlining the research that will be undertaken in
support of a proposal. This should provide details on:
o the primary and secondary research (including pilots) that will be used to
evaluate public value and market impact; and
o existing BBC or external services against which the proposal will be
benchmarked. While direct comparisons may not always be possible, high
level comparisons should be provided where possible.
9
3.5. These documents will be discussed with Ofcom. The Trust will normally respond to
the BBC Executive within two weeks of their receipt. Once approved, the BBC
Executive should gather the necessary evidence.
3.6. Any pilots undertaken in support of an application must comply with the terms of the
Trust Protocol on the handling of public service pilots and trials.11
3.7. It is possible that proposals may develop in light of responses to trials and pilots or
evidence gathered. In such cases the BBC Executive will be responsible for ensuring
that final proposals submitted for approval are supported by appropriate evidence.
Applications to the Trust
3.8. The BBC Executive Board must approve all applications before they are submitted to
the Trust. Applications must include a detailed description of the proposed change,
including its likely scale and budget. This should be accompanied by detailed evidence
in support of the application.
3.9. On receipt of an application, an agreed understanding of the proposal will normally
be produced with the BBC Executive. This will serve as the basis for any assessment
by the Trust and by Ofcom. Features not explicitly covered in the agreed service
description will not be considered for approval as part of the PVT.
3.10. Following this process the BBC Executive's application will be considered by the
Trust.
11 Available at www.bbc.co.uk/bbctrust/assets/files/pdf/regulatory_framework/protocols/d8_handling_of_pilots_trials.pdf
10
4. The Public Value Test process
Consideration of an application
4.1. The Trust will consider any proposed changes to determine whether the PVT should
be applied, taking into account the factors outlined in Section 2 of this guidance.
Depending on the nature of the proposal, the Trust may decide to undertake an
initial investigation before making this judgment to inform itself of any facts or
considerations which it considers potentially relevant to the exercise of its judgment.
4.2. The Trust may determine that a specific proposal does not require a PVT. Depending
on the scale and nature of the proposal, in such cases the Trust may either:
* refer the proposed change back to the BBC Executive for approval; or
* consider the proposed change through the appropriate Trust approvals route
for that service. Details of the various approvals process are contained in the
relevant Trust Protocols.12
Launching the PVT
4.3. In the event that the Trust determines that a PVT should be applied, it will publicly
announce the launch of the process and inform the Joint Steering Group ("JSG") of
the need for a MIA.13
4.4. Around the launch of the process the Trust will aim to publish as much relevant
information about the proposal as possible, including the application from the BBC
Executive and the agreed service description.
4.5. In some cases it may be necessary to make some redactions before publishing this
information, for example if the application includes information which may be
commercially sensitive to the BBC, third parties or suppliers; includes a level of cost
detail beyond that normally published by the BBC; or could have an impact on wider
policy considerations. The Trust will aim to keep such redactions to a minimum and
will ensure that any information not open to external scrutiny is rigorously assessed
during the PVT process.
4.6. At the start of the PVT process the Trust will outline the proposed timetable for
completion of the process. Where necessary, this timetable may be revised during
the PVT process. The process must be completed within six months. In some cases
12 The Trust's Protocols can be found at: www.bbc.co.uk/bbctrust/framework/protocols/index.html
13 See Section 6 of this guidance for detail on the purpose and composition of the Joint Steering Group.
11
the Trust, following discussions with Ofcom over the MIA, may agree with Ofcom
that it is appropriate to conduct the PVT process in a shorter period.
4.7. At its discretion, where justified by the circumstances, the Trust may also allow a
longer period than six months for the completion of the PVT. Likewise, the JSG,
where justified by the circumstances, may allow for a longer period than three
months within which to complete the MIA. Possible amendments to the required
timetable or process are discussed in the following sections and will be outlined at
the outset of the PVT process.
4.8. In conducting the PVT process the Trust will take account of both the PVA and MIA.
These assessments are considered in the following Sections and are normally
conducted in parallel during the PVT process.
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5. The Public Value Assessment (PVA)
The PVA process
5.1. The Public Value Assessment (PVA) provides an assessment of the likely public value
that will be created by the proposed change. The PVA is a Trust document that is
produced with the support and assistance of the Trust Unit and adopted by the
Trust. Conduct of the PVA may be supervised by the PVT Steering Group.14
5.2. The PVA normally commences at the launch of the PVT process. By law, the BBC is
required to promote equality positively and work to eliminate unlawful discrimination
across race, disability and gender in respect of its public functions. An Equality
Impact Assessment will be conducted at the start of the PVA process to identify the
potential impact on different people.
5.3. During the PVA process appropriate public consultation will be carried out, as one
method to assess the aspects of public value that are relevant to the proposal.
Consultation will normally involve seeking representations on the proposal from
licence fee payers, stakeholders, and any particular groups for whom the subject of
the proposals may warrant specific input. The Trust is also required to consult with
its regional Audience Councils during the PVT process.15
5.4. Representations will normally be sought for a period of 28 days. This period may be
longer or shorter taking into account matters such as the nature and complexity of
the relevant proposals and the need for adequate consultation. The Trust will also
consider, in relation to the proposals, whether it should undertake research of its
own and/or obtain any external expert or professional input. At least an analysis of all
inputs received from the consultation will normally be published.
5.5. The PVA will normally be completed within 12 weeks. However, as noted in Section
4, it can be conducted within a shorter or longer period. The Trust will consider
matters such as the nature and complexity of the proposals in deciding whether a
different timescale is appropriate for completion of the PVA.
5.6. The Trust and Ofcom will aim to publish the final PVA and MIA at the same time. An
advance copy of the reports will be shared in confidence with the BBC Executive one
working day in advance of publication.
14 Terms of reference for the Trust's sub-committees are available at:
www.bbc.co.uk/bbctrust/about/meetings_and_minutes/bbc_trust_committees.html
15 Information on the Trust's Audience Councils is available at www.bbc.co.uk/bbctrust/about/audience_councils/index.html
13
Methodology for the PVA
5.7. This section provides an overview of the methodology for conducting the PVA.
5.8. The BBC's main object is the promotion of its Public Purposes. The PVA should
therefore consider the value which the proposed change would deliver through its
contribution to the BBC's Public Purposes. These are presented below.
Diagram 2: The BBC's Public Purposes
5.9. In considering the Public Purposes the Trust will also assess the proposal in terms of
the BBC's wider strategy, including the expectations of licence fee payers and
external market developments.
5.10. At the outset of each PVA the Trust will consider carefully the aspects of public value
which may be relevant to the assessment of the proposal and how those aspects
should be explored and evaluated. In general terms, a PVA should include an
assessment of:
* the value which licence fee payers would place on the proposed change as
individuals;
* the value which the proposed change would deliver to society as a whole
through its contribution to the BBC's Public Purposes; and
* the value for money of the proposed change and its cost (including the
potential financial implications if the proposed change were not to be made).
5.11. More specifically, the extent to which a proposed change promotes the Public
Purposes and creates public value will usually be assessed with reference to certain
key drivers of public value. However, depending on the proposal the Trust may
decide to consider other factors if this is more appropriate. An explanation of the
steps taken will be provided in the PVA.
1.
Sustaining
citizenship
and civil
society
2.
Promoting
education and
learning
3.
Stimulating
creativity and
cultural
excellence
4.
Representing
the UK's
nations, regions
and
communities
5.
Bringing the
world to the
UK and the
UK to the
world
6. Helping to deliver to the public the benefit of emerging communications technologies and
services and, in addition, taking a leading role in the
switchover to digital television
14
5.12. The four drivers of public value that the Trust will usually consider are outlined
below.
Diagram 3: Drivers of public value
5.13. The exact definition of each of these drivers of public value will be determined in the
PVA and may vary depending on the nature of the relevant proposals. The following
however provides a broad guide on the drivers that may be used in the PVA.
Reach
5.14. Reach assesses the projected usage of the service over a given period of time (for
example, the number or percentage of adults who would use the service at least
once in an average week).
5.15. Taking into account its duties under the Charter and Agreement and the particular
proposal under consideration, the Trust may in some cases wish to focus on a
particular consideration of reach, for instance reach by specific audiences and regions
or programme genres.
Quality and Distinctiveness
5.16. The PVA may consider the likely quality of the proposal. This may include the quality
of any content to be supplied by the service or possibly technical issues in some
cases. The PVA will also consider the extent to which the proposal is distinctive from
other existing or proposed services.
5.17. Distinctiveness may be particularly difficult to assess in nascent markets which need
to take into account the emergent nature of the market. The PVA would need to
consider what features could make a proposal distinctive in such markets.
Impact
5.18. The impact of a proposal can consist of two components which may be considered
separately:
Public Value Assessment ­ Broad description of the drivers of Public Value
Reach Quality Impact Cost & value for
money
How far will the
proposal extend the
BBC's reach and
usage?
Is the proposal of
high quality and
distinctive?
Will the proposal
create consumer
and citizen benefit
(i.e. for individuals
and/or society as a
whole)?
How much will
the proposal cost
to deliver and will
it provide value
for money?
15
a) Consumer benefit ­ this refers to the benefit that an individual user would
directly gain from using the proposed service, for example, whether individuals
find a proposed new service engaging or challenging. This would also include an
assessment of the value which licence fee payers would place on the proposed
change as individuals.
b) Citizen benefits ­ this refers to benefits which the proposal may create for
society as a whole, for example, whether a service would result in a better
functioning democracy or understanding and respect between different
communities
Cost and Value for Money
5.19. This driver assesses the value for money of the proposed change and the cost to the
BBC of the proposals (including the potential financial implications if the proposed
change were not to be made). This may involve consideration of the relative
efficiency of delivering the proposed change, for instance through comparison with
similar services where possible.
Overall assessment
5.20. The PVA will consider the relative strength with which the proposed change
supports the relevant drivers of public value and the cost of delivering that value. The
outcome will take account of all the factors, although consideration may also be given
to isolate those factors which specifically drive the Public Purposes for the proposal
in hand.
5.21. The PVA may also consider any conditions which would alter the public value of the
proposals. Finally, the assessment may also take some account of alternative methods
of delivering the stated aims of the proposal. However, this would be unlikely to
involve an assessment of any alternative options in detail.
Sources of evidence
5.22. The Trust will always include appropriate public consultation in exploring and
evaluating public value. The Trust may draw on a range of other evidence during the
PVA. This includes, but is not limited to:
* Forecasts of demand
* Results from trials or pilots
* Qualitative and quantitative research including consumer research and
deliberative juries
* Internal and external market analysis
* Independent expert advice
16
5.23. The Trust will assess the evidence submitted by the BBC Executive and may question
the BBC Executive further where necessary. If required, the Trust may also
commission additional research.
Coordination with Ofcom
5.24. The Trust will liaise with Ofcom throughout the PVA process. Information will be
shared between both parties, except where submitted in confidence or where
otherwise overtly commercially sensitive, as set out in the JSG constitution.16
5.25. The Trust and Ofcom will work to ensure that the PVA and MIA provide a
consistent basis on which the Trust can assess the proposal. However, the PVA and
MIA perform different roles and the Trust's conclusions on the PVA will be
developed independently and without the input of Ofcom, and vice-versa.
16 Available at: www.bbc.co.uk/bbctrust/assets/files/pdf/about/ofcom_trust_mou.pdf
17
6. The Market Impact Assessment (MIA)
6.1. The MIA assesses the effect of the proposed service on other services in the market,
both now and in the future. The MIA is provided by Ofcom and overseen by the
Joint Steering Group (JSG). The JSG consists of three members from Ofcom and
three from the Trust. The JSG is responsible for:
* Setting and publishing terms of reference for the MIA.
* Agreeing the potential relevant markets for the assessment after considering
advice from Ofcom. Where there are a number of potential markets
identified by the JSG, the MIA will report on each potential market in the
absence of agreement to do otherwise.
* Ensuring that the MIA is conducted in a manner appropriate to the nature of
the PVT and to a suitable schedule.
6.2. The JSG will also establish a timetable for completion of the MIA. The MIA process
itself begins with the publication of the terms of reference for the MIA. The MIA
must be completed within three months, although the JSG, where justified by the
circumstances, may allow a longer period. The JSG may also determine, after public
consultation, that a simplified approach is appropriate to be used for a particular
assessment.
6.3. The MIA will be undertaken in accordance with the methodology agreed between
Ofcom and the Trust. This is available at
www.ofcom.org.uk/research/tv/bbcmias/statement/.
6.4. While the provision of the MIA will be overseen by the Trust, the substantive
findings of the assessment remain a matter for the judgment of Ofcom.
6.5. The final MIA report will be published by Ofcom. The Trust and Ofcom will aim to
publish the MIA and PVA at the same time, and in any event at least one week before
the provisional PVT findings are published by the Trust.
18
7. Conclusion of the PVT
7.1. The Trust will consider the final PVA and MIA reports. In deciding whether to grant
approval for the proposal, the Trust must satisfy itself that any likely adverse impact
on the market is justified by the likely public value to be created. In arriving at its
decision, the Trust will also take into account whether any approval would be
consistent with the Trust's duties under the Charter and Agreement and competition
law (including state aid law).17
7.2. The broad considerations the Trust will generally take into account in the PVT are
outlined in the diagram below.
Diagram 4: PVT considerations
7.3. In assessing the proposal the Trust may also consider whether any possible
amendments to the proposal could increase the public value created or reduce the
impact on the wider market. Having considered the PVA and MIA the Trust will draw
provisional conclusions on the proposed change.
7.4. At least one week after the publication of the PVA and MIA reports, the Trust will
publish its provisional conclusions. The Trust will also publish any proposed
amendments to service licences, if required by the proposal. Where the proposal
requires a new service licence the Trust will publish for consultation, at this time or
17 The Trust will satisfy itself in this regard on the basis of advice received. Ofcom has no responsibility for providing the
Trust with advice on compliance with competition law, either as part of the Market Impact Assessment or otherwise
Public Value Test (PVT)
Public Value
Assessment (PVA)
Fit with Purposes
Quality & Distinctiveness
Impact
Reach
Cost and VFM
Market Impact
Assessment (MIA)
Agreed methodology
Competition based
Economic effects
19
shortly thereafter, a new draft service licence in relation to new services. The
amended or new service licence will come into effect as a result of the decision.
7.5. The Trust will publicly consult on its provisional conclusions, normally for a period of
28 days. The Trust may, however, consider holding a longer or shorter consultation
period, depending on matters such as the nature and complexity of the proposal and
the volume of information published at this stage of the process. The Trust will
consider and take account of responses received during the consultation before
making its final decision.
7.6. Following the consultation and having taken account of the responses, the Trust will
publish its final decision. Depending on the view reached, the Trust can either:
* approve a proposed change to the BBC's UK Public Services; or
* reject a proposed change to the BBC's UK Public Services; or
* approve a proposed change to the BBC's UK Public Services with conditions.
7.7. The Trust will publish its final decision and at least an analysis of all inputs received in
connection with the public consultation. It will also publish any amendments to
service licences, or new service licences if required, reflecting the Trust's decision
and which were consulted on as part of the PVT process. The final decision will be
shared in confidence with the BBC Executive one working day in advance.
7.8. The Trust's decision is the last stage in the PVT process and the Trust's decision in
relation to the PVT is final.
7.9. Proposals for the introduction of a new service18
are, however, also subject to a
procedural veto by the Secretary of State for Culture, Media and Sport, as set out in
Clause 33 of the Agreement. Where the Trust considers that the proposal will
involve a new service licence, and will therefore be subject to confirmation from the
Secretary of State that the procedural veto will not be exercised, the Trust will take
this into account in the PVT process.
18 The "introduction of a new service" for the purposes of the Secretary of State's procedural veto means anything which
the Trust proposes to authorise by a new service licence rather than the amendment of an existing licence (Clause 33(4)
Framework Agreement).
20
8. Sources of further information
Further information on the PVT can be found at:
www.bbc.co.uk/bbctrust/framework/public_value_test/index.html
Or by contacting:
The Head of Finance, Economics and Strategy
BBC Trust
211 Marylebone High Street
London
W1U 4AA
Information on the MIA can be found at:
www.ofcom.org.uk/research/tv/bbcmias/
The BBC's Charter and Agreement can be found at:
www.bbc.co.uk/bbctrust/framework/charter.html