APP0139

Written evidence submitted by HSBC

Introduction

1. HSBC welcomes the opportunity to respond to Sub-Committee on Education, Skills and the Economy inquiry on apprenticeships. We have focussed our response on those questions where we have experience and expertise.

2. Apprenticeships play an important role in HSBC’s recruitment strategy. In September 2011 we were the first major bank to launch an apprenticeship programme, and since then more than 2,300 people have joined the programme and over 1,100 have completed it. We are expecting approximately 500 new starters on our programme each year.

3. Designed for non-graduates aged 16+, our programmes cover the frameworks of business administration, customer service, IT, providing financial services and management. Learners study for a minimum of 12 months and work towards a range of practical and knowledge based qualifications, with apprenticeships running in our branch network, contact centres, operational areas in the UK including IT, and our global banking and markets business. 98% of our apprenticeships are Level 3 (Advanced Apprenticeships).

The process of applying for apprenticeships

4. HSBC believes apprenticeships provide people who may not have gone to university with another route into a challenging and rewarding career in our industry. Our apprenticeships offer our people externally recognised professional qualifications, and access to a development programme where participants keep learning and have the opportunity to progress into management and leadership positions in HSBC.

5. There are two points of entry to our apprenticeship programme:

For school and college leavers

6. This route is aimed at individuals in sixth form or college education who are keen to start their career in banking immediately instead of going to university. These programmes operate with an annual intake date of October / November. Positions are advertised on the National Apprenticeship Service (NAS) and HSBC websites as well as those of the two leading firms providing careers advice in schools (mykindafuture and The BigChoice). Individuals follow the normal HSBC recruitment process which enables us to offer our apprentices a full time role with HSBC, with a salary equivalent to the rate for doing the job. Depending on the business area there may be specific entry requirements (for example GCSEs at A-C in English and Maths).

For individuals joining HSBC in a direct entry-level role

7. This route is aimed at those who first join HSBC in a direct entry-level position, such as a cashier in one of our branches or a customer service adviser in one of our call centres or operational areas. Those who have recently joined the bank are able to join the programme once they have completed their three months induction period and if they are judged to be performing well. In addition, we believe apprenticeships are a valuable tool in our drive to upskill our existing workforce, so we invite existing employees to join the programme if they meet our criteria.

Take-up of apprenticeships amongst 16–19 year olds and steps that can be taken to make more young people aware of available opportunities

8. Over the last three years we have seen a greater willingness among students and parents to consider apprenticeships as a valid alternative to university, and this has particularly been the case in the last year. However we believe there is still a time lag in many schools embracing apprenticeships as a worthwhile alternative to university, and we would support measures to ensure schools embrace the apprenticeship agenda.

9. At HSBC we have taken a number of steps to increase the awareness of apprenticeships as a route into banking amongst young people and their teachers, including by:

• Increasing the number of placements on our work experience programme, which enables us to talk about our apprenticeships as an alternative route into HSBC;
• Producing literature on careers choices for schools;
• Producing a guide for school teachers on careers in banking; and
• Engaging with mykindafuture and The BigChoice to help communicate with school students on career opportunities.

Routes for progression to higher qualifications for current apprentices

10. We encourage all our apprentices who meet their performance objectives and show potential to develop further, and have a range of internal training tools and finance for additional qualifications available.

11. Two thirds of our apprentices complete the Level 3 Providing Financial Services qualification, and we encourage them to complete the ifs Level 4 Diploma from which students can progress to Level 5 and 6 qualifications.

12. We believe that the development of Trailblazer standards and the promotion of higher and degree apprenticeships will encourage organisations to construct a professional development pathway.

The quality of, and minimum standards for, apprenticeships, and how standards can be enforced

The institutional architecture of current provision and how this may be affected by the proposed Institute for Apprenticeships

13. HSBC has constantly striven to ensure our apprenticeships are of the highest standard, and Ofsted has awarded HSBC’s apprenticeship programme a ‘2’ rating with “outstanding elements in all areas”. Our Timely Success Rate is 91%, 35% above national average. HSBC won the Target GTI Award for Best Apprenticeship Programme in 2014, the National Apprenticeship Service award for Macro Apprenticeship Employer Newcomer of the Year in 2013, and we are recognised as one of the City & Guilds Top 100 Apprenticeship Employers and one of the top five apprenticeship employers in the UK. We are a keen supporter of the Trailblazers initiative and have been involved in the development of the new standards for the financial services sector.

14. We believe it is vital to ensure that quality and standards for apprenticeships are protected. The regulations and classifications in the Trailblazers scheme should serve to ensure the continued development of high-quality apprenticeship provision, but the key issue will be to ensure that standards are maintained. In order to achieve this we believe the following requirements should be in place:

• Employers must demonstrate they have quality assurance systems and processes in place (as they do now with capability and capacity questions);
• The adapted Ofsted regulation of the training provider should continue;
• A standard register of providers should be made available;
• Clarity is needed on the governance structure that will be established to ensure these standards are met on a continual basis and on what authority (if any) the ifA will have over Ofsted to ensure timely inspections can be undertaken. In our opinion, a sensible division would be for the ifA to look after the inspection of Direct Grant holders who are businesses and for Ofsted to maintain its inspection of educational establishments; and
• Those policing standards need to have adequate resourcing to enable them to enforce quality, taking into account the potential increase in workload resulting from the drive to create new apprenticeships.

The proposal for an apprenticeships levy and how this may be implemented

15. HSBC is keen to ensure the proposed levy is successful in addressing the Government’s core aims of increasing the quality and quantity of apprenticeships in England. If we are to continue to develop our apprenticeship programmes and implement schemes which best meet the needs of our business and workforce, the guiding principle needs to be that employers have maximum flexibility in how to spend their funding. There are a number of issues we believe need to be addressed to ensure this is the case.

Using contributions to pay for administrative costs

16. There are substantial costs in running an apprenticeship programme in addition to the direct costs of providing the apprenticeship, such as attracting candidates, resourcing the recruitment process, and managing on-boarding. We are therefore concerned by indications that the Government is minded to rule out apprenticeship funding from being used to meet a wider set of non-direct training costs to employers. If we are to upscale our existing new programmes, or introduce new ones, and continue to attract high quality candidates, we will face significant recruitment, marketing and infrastructure costs. We believe businesses should be able to use their levy contributions to pay for these administrative costs so that the funding available properly matches the costs of providing apprenticeships.

Transitional arrangements

17. We would like to see consideration be given to transitional arrangements such as tapering the levy or extending the time frame we have to spend our credits. We believe the launch of higher and degree apprenticeships provide real opportunities to upskill and add to the productivity of the UK workforce. However given the time it takes to produce new apprenticeship standards we are concerned that not as many will be ready in 2017/18 as we would like. One option to address this would be to extend the period given to spend the credits under the terms of the levy from two years to three years for the first year, reverting back to two years thereafter.

Traineeships

18. We believe that the levy funding should be able to be used on traineeship programmes, which HSBC believes can play a vitally important role in opening up a career in financial services to candidates from more diverse backgrounds who might currently feel precluded from applying. Our programme has been specifically designed by HSBC and The Prince’s Trust to ensure that each young person has the best possible chance of being successful in an interview for a direct entry level role in our branch or call centre network. Our intention is for our trainees to progress onto the HSBC Apprenticeship Programme, as part of our approach to professionalising our workforce. Since 2014, 315 young people have attended the HSBC traineeship programme with a pass rate of 68%.

Devolved administrations

19. We would like to see further clarity over how the levy will apply across devolved administrations and, in particular, how the total funds will be distributed. HSBC’s apprenticeship programme has full coverage across Great Britain so we are keen to ensure the levy does not interfere with our ability to fund such training outside of England. We would like to see the split in our levy contributions mirror our HR footprint.

March 2016