The training provider surveyed 250 HR managers in the sector and found that less than half of businesses (49%) have used the majority of their funding.
The levy requires all companies with a pay bill of more than £3m to contribute 0.5% of their payroll costs to the scheme, which they then claim back for apprenticeship training. This amount is then topped up by 10% from the Government.
Funding contributions will start to expire after 24 months, which will be in May 2019.
Employers cited wanting to be sure a programme was high quality before investing, not having enough time, and not understanding how the funding worked as reasons for stalling.
Jill Whittaker, managing director of HIT Training, said she was concerned that many hospitality figures (40%) reported having a weak understanding of the levy.
She said: “Businesses are at crunch point to start using or losing some of their funding pots. Not only will it directly benefit their own business, the hospitality industry as a whole is facing a skills shortage and so it’s more pertinent than ever for businesses to seize the opportunity to upskill their workforce, attract new talent and improve their staff retention.”
Businesses with pay bills below £3m can access Government subsidies of 90% of the cost of an apprenticeship.
Whittaker continued: “We’re encouraging hospitality employers to take full advantage of the apprenticeship levy to upskill their entire workforce and can provide advice on the best way to maximise the funds available.
"After all, investing in training programmes helps to motivate employees, create a dynamic and enthusiastic workforce and position the operator as an employer of choice.”
Why are businesses not using the funding?
37% said they wanted to take their time to make sure they were investing in a high-quality programme.
22% reported not having enough time to set up or extend an apprenticeship programme
18% explained they did not understand how the legislation worked.
18% said they had not found the right training provider to work with
A Department for Education spokesperson said it would continue to work with employers to help with spending their levy funding.
The spokesperson said: “Apprenticeships benefit people of all ages and backgrounds, and the levy is an important part of the changes to raise apprenticeship quality by creating long-term, sustainable investment in training.
“We will continue to work closely with employers to help them take advantage of the levy and wider funding changes, including through support from the National Apprenticeship Service, which provides advice and guidance to support employers across England to set up high-quality apprenticeship programmes.
“We recognise that employers want and need flexibility around their levy funding, which is why we have already extended the amount of time employers have to spend their levy from 18 to 24 months.”
Chancellor Philip Hammond announced in his Autumn Budget that the contribution for smaller businesses would be halved from 10% to 5%.
The Government will also increase a transfer cap from 10% to 25% from April 2019, allowing larger businesses to donate more of their unused funds to smaller ones.