Apprenticeships

APP 90

Written evidence submitted by McDonald’s

1. Executive Summary

1.1 McDonald’s is grateful for the opportunity to respond to the Business, Innovation and Skills Committee inquiry into Apprenticeships.

1.2 At McDonald’s, we believe that skills are a critical driver of UK economic growth and social mobility - that is why we invest £36 million of our own money each year in training our people. Investing in skills not only benefits the wider UK economy and our business, but also our employees, their families and the local communities we serve.

1.3 We employ over 87,500 people in the UK, and recently announced that we will create 2,500 new jobs in 2012 – around one third of these new jobs will be made available to first time workers and over half are expected to go to young people under 25.

1.4 We pride ourselves on employee retention: 90% of our restaurant managers and one in five of our franchisees started as crew members while half our Executive Team started in our restaurants. We are especially proud that eight out of 10 staff (79 per cent) now see their job as a long-term career.

1.5 Almost 11,000 employees have completed apprenticeships with McDonald's to date; around 7,000 additional apprentices are currently in learning; and 56 students have graduated with a foundation degree in managing business operations.

1.6 We see the equivalent of six full classes gain adult certificates in English and maths every week. In total, we are delighted to have supported our staff to gain almost 35,000 transferable qualifications.

1.7 McDonald’s welcomes the opportunity to set out our view on apprenticeships and apprenticeship funding. In addition, we hope to share some of the insights we have gained as one of the largest apprenticeship providers in the UK by placing the training and development of our people at the heart of our business.

1.8 In summary, our response within the terms of reference for this inquiry focuses on our view that:

· Further streamlining could take place across the National Apprenticeship Service (NAS), Skills Funding Agency (SFA) and the Department for Business, Innovation and Skills (BIS) to deliver greater efficiencies and simplify process for SMEs.

· Additional funding for apprenticeships would be beneficial but should be targeted at the point of greatest need including entry-level qualifications for young people.

· The quality of existing apprenticeships is generally high and should be strengthened through existing review and assessment process. However, Government could do more to increase the currency of vocational education programmes. For example UCAS could award points to nationally-recognised vocational courses that are delivered in the workplace.

· Level 3 apprenticeships and beyond, are valuable but should not come at the expense of employer-led Level 2 apprenticeships, which provide a vital first foot on the ladder for thousands of young people each year.

· We do not believe that apprenticeship bonuses are a practical solution to encourage employers to take on apprentices on a long-term basis – particularly for SMEs the focus should be on advice, support and reducing bureaucracy.

1.9 As a part of our work to continually improve the training and education we provide, we have taken time to consider the critical factors that have contributed to the success of our programme, and the achievements of our people. We hope that this thinking may be of use to the Committee, and to other organisations seeking to deliver training opportunities for their employees.

1.10 In summary we believe the critical factors in the success of our training and education programme have been:

A. Access - We have created ‘Our Lounge’, a dedicated staff intranet website where employees can access free of charge online maths and English courses to achieve Adult Certificate qualifications at level 1 & 2, in literacy and numeracy at a time that suits them, free from embarrassment or stigma.

B. Relevance - Traditional classroom learning can sometimes seem a little abstract to students. We bring skills and training to life in our restaurants allowing people to see every day how important basic skills are to the running of a business. This includes a national work experience programme – for some students this includes a qualification they can attain during their time with us.

C. Inspiration - Every day our crew members are exposed to people from their local community who have progressed through the McDonald’s business. Whether it is the crew member a few years older who has become an apprentice or the Business Manager running a restaurant with an annual turnover of around £2million, they are constantly meeting people who give them the confidence they can do it too.

D. Recognition - We offer recognised qualifications for our employees at every level which will be useful to them whether they stay at McDonald’s, move to a job elsewhere or go into further education.

E. Voice - McDonald’s crew members all have a voice. The ‘Our Lounge’ staff intranet site allows us to keep in constant contact with our team up and down the country and lets them feed into our skills and training programme.

1.11 We hope this submission and our experience proves helpful to the Committee as you conduct your inquiry. In addition, we have enclosed a copy of the McDonald’s prospectus for 2012-13 which is sent out to schools and colleges across the UK to provide information to young people on the training and career opportunities we provide.

1.12 We would be very happy to provide any additional information necessary, and would welcome the opportunity to meet with the Committee to share our experiences in greater detail.

2. Committee Questions

2.1 How successful has the National Apprenticeship Service been since it was created in April 2009? Has it helped bridge the gap between the two funding Departments? (BIS and Department for Education)

2.1.1 In our experience, the NAS has been successful in its role of funding and co-ordinating the delivery of apprenticeships. However, now established, we believe more could be done to increase efficiency.

2.1.2 We have, in the past, supported Government in its bid to explore the ways in which efficiencies can be delivered across the skills system, especially through our response to the Skills for Sustainable Growth consultation. With apprenticeship providers still being required to liaise with the NAS, SFA and BIS, we believe that Government could go further to provide a more streamlined, joined-up and therefore more efficient approach. McDonald’s recently contributed to the BIS led Employer Reference Group report ‘simplifying end‑to‑end apprenticeship processes for employers’. This LSIS report has been the catalyst for a number of measured changes which have already taken place. Over time, Government could consider going further by centring all relevant powers within the NAS, creating a one-stop shop for apprenticeship providers.

2.2. Is the extra funding promised by the Coalition Government necessary for apprenticeships? How can this funding best be spent?

2.2.1 In addition to the £36m McDonald’s invests in our people each year we also receive public funding from government to transform some of our industry leading training into nationally-recognised qualifications – including Apprenticeships. This funding is managed by the McDonald’s Education Company (McEdCo), and geared towards providing the additional infrastructure, resources and incurred costs for the provision of Vocational Level 2 and Level 3 qualifications. The public funding we receive for our Apprenticeship programme does not subsidise existing training programmes, but is ring-fenced to support Apprentices.

2.2.2 While additional funding for apprenticeship providers would be beneficial, we believe that Government investment should be directed at the point of greatest need. Our experience as an employer of 87,500 people, more than half of whom are under the age of 21, is that additional investment should be directed at basic literacy and numeracy programmes, to create opportunities for young people who would otherwise be excluded from apprenticeships due to a lack of qualifications. Any McDonald’s staff member can join our Apprenticeship scheme, regardless of previous attainment. Our apprenticeship equips young people with the fundamental tools they need to progress, whatever their future career.

2.2.3 For example, McDonald’s has created ‘Our Lounge’, a dedicated staff intranet site where employees can access free of charge online maths and English courses to achieve qualifications at a time that suits them, free from embarrassment or stigma. Almost 15,000 people have now gained Adult Certificates in literacy and numeracy with McDonald’s. We think this is a model that could be rolled out more widely by Government and industry, providing universal access to free resources that enable people to train for basic qualifications in their own time.

2.3. Are apprenticeships of a high enough quality to benefit apprentices and their employers? Should there be more Level 3 apprenticeships?

Apprenticeship quality

2.3.1 In order to justify their cost to both providers and the public purse, apprenticeships should be of sufficiently high quality to deliver meaningful benefits to an apprentice, their employer and potential future employers.

2.3.2 That is why, at McDonald’s, our apprenticeships are designed to provide students with the skills they need to progress, not just within McDonald’s but in the world of work beyond too. On average our employees take around 12 months to complete an apprenticeship. We welcome evaluation from Ofsted to ensure our qualifications are robust, and recently received a ‘good’ rating for our apprenticeship programme, with several areas rated outstanding.

2.3.3 We are especially proud of the fact that eight out of 10 staff (79 per cent) now see their job as a long-term career compared to just one in ten when they started. A crucial factor in achieving this has been making nationally recognised qualifications available to all our staff. The average length of service for our hourly paid employees is 2 ½ years and for our Business Managers over 11 years.

2.3.4 We pride ourselves on employee retention: 90% of our restaurant managers and one in five of our franchisees started as crew members while half our Executive Team started in our restaurants. We are especially proud of the fact that eight out of 10 staff (79 per cent) now see the job as a long-term career compared to just one in ten when they started.

2.3.5 Beyond McDonald’s, as the recent NAO report on adult apprentices demonstrated, apprentices and inspectors are generally positive about the quality of apprenticeships, with 91 per cent of apprentices satisfied with their training – and we believe the same applies to apprenticeships for younger age groups.

2.3.6 Where quality issues do exist the focus should be on improving programmes by strengthening existing review and assessment process.

2.3.7 However, we also agree with the Wolf Review into Vocational Education that the currency of vocational education programmes could be higher: celebrating vocational qualifications and recognising their value is vital to their success. To help achieve this, UCAS could award points to nationally-recognised vocational courses, to ensure their value is recognised more widely. This move would not only enhance recognition of vocational qualifications, but would also help to strengthen quality of provision and assessment.

Wider availability of Level 3 apprenticeships

2.3.8 McDonald’s believes that Level 3 apprenticeships are most valuable as part of a pathway of progression that starts at Level 2 and extends to Level 3 and beyond. The focus on Level 3 apprenticeships should not come at the expense of employer-led Level 2 apprenticeships, however, which provide a vital first foot on the ladder for thousands of young people each year. Support should be maintained for all levels throughout the skills chain.

2.3.9 Level 2 apprenticeships give participants the opportunity to gain practical, transferable workplace skills; especially for those people who have been excluded from traditional qualifications and have limited employment opportunities. While traditional classroom learning can seem abstract to young people, a Level 2 qualification helps bring basic skills to life in our restaurants, allowing people to see every day how important and relevant they are to the running of a business.

2.3.10 Continued support for learning at this level is therefore vital. If public funding to provide these qualifications was withdrawn, businesses like McDonald’s would be more likely to employ individuals who already have those skills, particularly in such a competitive labour market. Without our Apprenticeships, many young people would not have the necessary skills to enter employment, leaving them unemployed and lacking confidence.

2.3.11 However, support should not stop at Level 2 – it should extend to Level 3 and beyond, to ensure that vocational education programmes are considered a viable route alongside traditional academic programmes. That is why we are rolling out a pilot on Level 3 Apprenticeships, starting this month, in Shift Management, as part of the Employer Outcome Pilot and why we already offer Foundation Degrees in Managing Business Operations.

2.4 Apprenticeship bonuses – how should they function? Will they encourage the involvement of more small and medium sized businesses to take on apprentices? If not what will?

2.4.1 Our concern with apprenticeship bonuses is that they are not a practical solution to encourage businesses to take on apprentices on a long-term basis, and are especially risky for SMEs.

2.4.2 Our franchisees, operating across 163 businesses in the UK, with 726 restaurants represent a significant number of SMEs. The average number of employees in each franchise business is 320.

2.4.3 In our experience, the success of our franchisees in improving the skills of their employees rests on two factors. First, each of our franchisees is able to access regular guidance and advice through our business support teams. Second, because funds are available to franchisees they have the security of knowing that their efforts to educate their employees will be supported on a sustainable basis.

2.4.4 We therefore strongly recommend that as Government looks at ways to up-skill SMEs, due consideration is given to ensuring that advice and guidance is provided alongside sustained funding – and that the bureaucracy surrounding apprenticeships is reduced.

2.5 Is the current funding arrangement for training of apprentices of 100% for 16-18 year olds and 50% for 19-24 year olds appropriate?

2.5.1 McDonald’s believes that the current apprenticeship funding arrangement of 100% for 16 – 18 year olds and 50 % for 19 -24 year olds is appropriate. In light of youth unemployment levels, we are of the view that both Government and employers should be weighting their support towards younger people and those not in education, employment or training (NEETs). That is why 83% of McDonald’s apprentices are under 25, and why we expect more than half of the 2,500 jobs we create in 2012 to go young people under the age of 25.

3. Conclusion

We hope this submission provides the Committee with helpful insights and information to support your inquiry.

We are extremely proud of the apprenticeship programme we have developed and the significant investment we have made in wider education and training for our employees. This work has helped create opportunities for thousands of young people who are choosing to build a career with McDonald’s, or apply their newfound skills to the wider world of work.

As we comment throughout this submission, the existing framework established by Government is operating well. However, the focus on driving even greater efficiencies should continue over coming years.

In addition, we believe there is a range of experience that McDonald’s and other major apprenticeship providers can share with Government and industry, in particular SMEs, to extend the success and availability of the current programme.

Investing in the skills of our people is crucial to the success of our business. We are absolutely committed to continuing and extending our work in this area wherever possible.

We look forward to answering any questions the Committee may have in due course.

8 February 2012

Appendix: About McDonald’s and our apprenticeship programme

About McDonald’s

a.1 McDonald's is the UK's largest restaurant chain. We first opened our doors in the UK in Woolwich during 1974, and now have over 1,200 restaurants serving around 3 million customers a day. The majority of our restaurants are franchised to independent businessmen and women who own and operate restaurants as part of their local communities.

a.2 We employ a total of 87,500 people in the UK, and recently announced that we will create 2,500 new jobs in 2012 - taking McDonald’s total UK workforce to 90,000. This is testament to our continued investment in developing good people.

a.3 We pride ourselves on employee retention: 90% of our restaurant managers and one in five of our franchisees started as crew members while half our Executive Team started in our restaurants. We are especially proud of the fact that eight out of 10 staff (79 per cent) now see the job as a long-term career compared to just one in ten when they started.

McDonald’s a pprenticeship programme

a.4 McDonald’s Apprenticeship scheme began in 2009, and we are proud to now be one of the largest apprenticeship providers in the UK.

a.5 We offer Apprenticeships to our employees because we believe they are valuable qualifications for the individual and because, as the skills we provide are aligned to our business, they are a crucial driver of our growth.

a.6 Our focus is on creating opportunities for all our people regardless of previous educational attainment. That is why any McDonald’s staff member can join our Apprenticeship scheme, and why we have committed to making around one third of the 2,500 new jobs we will create during 2012 available to first-time workers.

a.7 We are proud of the results our people have achieved so far. In total, we have supported our staff to gain almost 35,000 transferable qualifications:

· More than 11,000 employees have completed apprenticeships with McDonald's to date;

· Almost 7,000 additional apprentices are in learning;

· We have helped our people achieve over 15,000 maths & English passes - an average of 760 exam passes a month which is equivalent to about 7 classrooms of students (30 in a class) passing exams every week;

· Over 4,000 employees have been awarded ‘Level 3 Diploma in Shift Management’;

· Over 4,000 employees have been awarded ‘Level 3 Award in Supervising Food Safety in Catering’;

· 56 students have graduated with a ‘Foundation Degree in Managing Business Operations’.

a.8 Our current skills agenda is implemented through the following channels:

· Level 1 & Level 2 qualifications in Literacy and Numeracy

· Apprenticeships at Level 2

· Diploma in Shift Management at Level 3

· Supervising Food Safety in Catering  Award at Level 3

· Foundation Degree in Managing Business Operations.

Funding of our education and training programmes and McEdCo

a.9 McDonald’s invests £36 million each year in training for our employees.

a.10 We also receive public funding from the Skills Funding Agency (SFA) to transform some of our industry leading training into nationally-recognised qualifications – including Apprenticeships.

a.11 The McDonald’s Education Company (McEdCo) is an independent company established to ensure good governance of our public funding, to support the development of our apprentices and the quality of our apprenticeship programme across the UK.

a.12 The funds received are used by McEdCo to fund educational programmes for the benefit of Company and franchisee employees. The use of funds is reviewed by the SFA and as such there is full transparency in relation to how all funds are spent.

a.13 McEdCo is not expected to make a profit, and any profit made is used to fund further educational activities to benefit the employees of the Company and franchises.

 

a.14 McEdCo is overseen by a Board consisting of three McDonald's Res taurants Limited employees and three franchisees. There is also an independent Chairman of the Board who has a casting vote, Lord Hunt of the Wirral.