In the depths of winter, more people die than at any other time of year. And the cost of paying for their funeral has been rising sharply – up 6% a year on average since 2004, which is double the rate of inflation. Funerals now cost £4,300 on average, plus an extra £2,000 for optional extras like catering and flowers.
Funeral poverty is a new and increasingly prevalent aspect of UK hardship. For the poorest people, the costs are up to 40% of their annual expenditure – just one of the alarming findings in a recent report by the UK Competition and Markets Authority (CMA). When the deceased person doesn’t have the funds, close relatives often need to borrow. In 2018, a third of next-of-kin had to contribute – with an average shortfall of £2,559.
Having to find this money is an additional stress at a horrible time. Anecdotally, housing officers in Dundee, Scotland, tell us that funeral debts are the reason rent hasn’t been paid; and there are church ministers whose members of their congregation can’t grieve properly for worrying about such costs.
Grieving families do not act as what economists would call “rational agents”. They are vulnerable and frequently haven’t organised a funeral before. They want to give their loved one the best possible send off, and consider it disrespectful to look for a “good deal” – particularly if the deceased’s wishes were never made clear. They rarely query funeral quotes, and often feel pressure to fund things they cannot afford. On average, poorer households spend similar amounts on discretionary extras as wealthier ones.
It is difficult for people to compare funeral prices since these are rarely published online, and funeral directors often bundle charges into non-divisible packages. This lack of transparent information has been challenged by price aggregators like Beyond and FuneralChoice, though few people are aware of these sites and even fewer use them.
The Competition and Markets Authority, which has been investigating the funerals industry, suspects it is not competitive, and is due to announce by March 31 whether it will make a full competition referral. But unlike most sectors where competition is potentially an issue, the funerals business is very fragmented: the two leading providers, Co-op Funeral Care and Dignity, have a combined market share of only 27%. The CMA says: “Dignity has consistently been among the most expensive funeral directors and Co-op more expensive than a large proportion of independents.”
Both Dignity and the Co-op saw their average revenue increase significantly ahead of inflation between 2013 and 2017. When a customer challenged Dignity about its prices in 2017, the company responded: “It has been the board’s policy, over the last six years to increase funeral prices by circa 7% per annum.” Dignity also contends, however, that it offers a higher quality product than many rivals, guaranteeing the use of a mortuary, for instance.
According to the company, its “standard funeral” costs around £3,500, whereas the Co-op has two packages in that category with an average cost of £3,097. Both numbers exclude third-party costs like cremation. Across the sector, funeral directors’ fees vary widely. When we assessed prices in Dundee in January 2019 using the Beyond site, for instance, we found that fees range from £700 to £3,265.
Since 2017, both Dignity and the Co-op have cut their prices. They have introduced no frills “simple funerals” – partly, says the CMA, because of “heightened media and government interest” in the sector; but also partly to defend market share. A survey by Royal London in 2018 found that Dignity had reduced funeral directors’ fees by 25% in the past year, while the Co-op has been price cutting, too. Amid media talk of a price war, the CMA said it was “difficult to establish whether this level of competition will be maintained over time”.
With three-quarters of funerals involving a cremation nowadays, costs for this service have also increased significantly, and now average around £800. Most crematoria are owned by councils, but private rivals are increasing – now nudging a third of the total. Dignity controls nearly half of this business, including all but one of the 20 highest cost crematoria in the UK, whose prices are around £300 above the national average.
For people on benefits, the UK government’s Funeral Expenses Payment helps to cover funeral costs. But the payment has not risen since 2003, and now falls short by an average of £2,355 per funeral. The eligibility criteria are also restrictive: the “working poor” don’t qualify, and nor do people with close relatives not receiving income support.
In Scotland, there are signs of improvement. The Scottish government has introduced an inspector of crematoria and inspector of funeral directors, along with a regulatory regime that could see a licensing scheme in future. The government has consulted on things like transparency of pricing, while the Funeral Expenses Payment will be replaced this summer by a Scottish equivalent that will be partly index-linked and with more generous eligibility criteria.
There are also some notable local interventions, both in Scotland and elsewhere. In Dundee, which has among the highest funeral costs in Scotland but also some of the most deprived wards, a local social enterprise called Funeral Link has been set up with Scottish government funding. It offers confidential support to bereaved people such as helping them to save money and signposting additional assistance.
East Ayrshire Council introduced the Respectful Funeral Service, a tailored package of lower cost but respectful offerings from local funeral directors. In its first year – financial 2017-18 – 22% of all funerals in the area used it, and there is little sign of this slowing down. Dundee is now heading in the same direction, while similar packages already exist in places in such as Gateshead, Cardiff, Salford and Nottingham.
It remains to be seen how much these will help reduce funeral poverty. At Dundee University we’re carrying out a project to measure what happens in Dundee. But combined with the CMA investigation and the national-level reforms in Scotland, the signs are encouraging. By shining a brighter light on the industry, bereaved people will hopefully be able to say goodbye to loved ones in future without falling into poverty in the process.