Heather Kennedy – Campaign manager

Funeral poverty briefing

Briefing on Funeral Poverty

October 2017

Introduction

  1. The Fair Funerals campaign has worked for 3 years tackling the root causes of funeral poverty, successfully driving public, industrial and parliamentary action on the issue.

Purpose of briefing

  1. To provide an overview of the factors behind the significant increase in funeral poverty across the UK and its impact on people’s lives.
  1. To present the Fair Funerals campaign’s recommendations on tackling rising funeral poverty.

Current situation – funeral poverty and debt.

  1. One in six people who organised a funeral in the past year admitted it caused them serious financial concern, with the average funeral shortfall standing at £2,334[i]. Grieving people are taking on increased levels of funeral debt, and the problem is set to increase significantly if steps are not taken to address it.
  1. Huge rise in prices -112% in 13 years - means an average funeral now costs £4,078. There’s been both a steep increase in costs charged by funeral directors for their goods and services and the price of cremations and burials, usually conducted by local authorities[ii]. Private and local authority crematoria increased their fees by 5.9% and 4.6% respectively, in just one year to 2017.
  1. According to the UK Cards Association, in 2013 the most expensive transaction on credit cards was “Funeral Services”, with an average cost of £1114[iii]. Their 2017 report on credit card debt shows that almost £200 million was on funeral costs alone, notwithstanding the £744 million already put on debit cards for funerals.[iv]

Current situation – the shrinking safety net

  1. The Social Fund Funeral Payment (SFFP) administered by the Department of Work and Pensions (DWP) was established in 1989 to cover the cost of a basic funeral for people on qualifying benefits where there were no other funds available through relatives or the estate of the deceased.
  1. Over the past 12 years, the value of the SFFP has eroded dramatically in real terms.The average award in 2016-17 was £1,429, around 35% of the average cost of a funeral.[v] As a result, even people awarded a grant are left with a potential shortfall of £2,355, often leading them into unmanageable debts.
  1. In 2016-2017, 27,000 grants were awarded worth around £38.6million. The amount spent on the SFFP has only increased from £2 million since 1988. In real terms this represents a large decrease in expenditure, being the lowest figure for more than 10 years.
  1. The DWP will only pay out a grant once the funeral has taken place. However, funeral directors normally require a deposit of over £1,200 before a cremation can go ahead, rising to over £3,000 for a burial. So people find themselves having to raise this money fairly quickly before they know if they’ll receive anything from the DWP, often leaving them with no choice but to access unaffordable forms of credit.

Current situation –an unregulated industry and dysfunctional market

  1. The UK funeral industry is worth an estimated £2 billion, with 3% annual growth between 2011 and 2013. It is increasingly dominated by three main companies: Dignity, Co-operative Funeralcare, and Funeral Service Partners. Yet is not currently subject to mandatory state regulation and there are no rules governing what funeral directors can charge for their goods and services.
  1. A poor public awareness of the true value of a funeral and the options available to people can be largely explained by how vulnerable bereaved people are as consumers and our understandable reluctance to ‘shop around’ when buying a funeral. Only 6% of consumers asked for quotes from more than one funeral director, with a massive 89% going with the first one they contacted[vi].

Current situation – government response to date

  1. Summer 2017 - DWP consulted on a raft of reforms[vii] to the Social Fund Funeral Payment. The suggested reforms, whilst welcome by Fair Funerals and others, don't address the fundamental issues. The government are due to publish their response in November 2017.
  1. December 2015 - cross-party Committee of MPs called for radical reform[viii] of the benefits system for bereaved people, calling it "opaque" and "outdated". A disappointing government response followed, and action to implement the recommendations has been minimal.
  1. Following the devolution of the funeral fund, Scotland have been starting from scratch and re-designing a new fund. We're awaiting final plans for how this fund will work.

Fair Funerals recommendations

  1. Raise the SFFP to cover basic costs
    As recommended by the Work and Pensions Select Committee, the SFFP must be increased to cover basic funeral costs. We’re calling on the government to raise the amount of money available for funeral expenses within the funeral fund in line with funeral cost inflation, which would increase it to £1,377. This would increase government spending by £18,262,000, which is, in our view a small amount to ensure we have a safety net for grieving people that our country can be proud of. After this point, the fund should be up rated annually in line with the retail price index.
  1. A Government plan to tackle funeral poverty
    Funeral poverty is a multi-faceted problem which spans different government departments including the DWP, the Department of Health, the Department for Business, Innovation and Skills and the Department for Communities and local government. Very little is known within government about how different state bodies converge and interact with bereaved people on low incomes. A government inquiry should be undertaken involving the relevant departments and recommendations made for improving the situation of people on low incomes arranging a funeral.
  1. Third party advocate scheme
    A third party advocate scheme could provide a solution to several of the factors that converge to create funeral poverty. The scheme could very quickly determine for people their eligibility for the SFFP and other state and charitable grants and help them find a funeral that meets their needs at a reasonable price. Such a scheme would be likely to save the DWP time and money because state funds would be channeled towards funeral directors charging a reasonable price as opposed to those with inflated costs. This could have the overall effect of bringing prices down across the funeral industry.
  1. Senior decision maker
    A senior decision maker should be appointed who can re-consider cases where an applicant has been turned down but their case involves exceptional levels of vulnerability and need.
  1. Local authorities - transparency
    Local authorities should provide transparent, accessible pricing information for cremations and burials to allow bereaved customers to make informed choices. Currently there is a dramatic postcode lottery in the prices charged for cremations and burials.
  1. Local authorities - cost recovery for cremations
    Local authorities should not be making a profit from their funeral service. As suggested by the consultation recently undertaken by the Scottish government, this service should be run on a cost-recovery basis.
  1. Local authorities – public health funerals
    Central government guidelines should be published which ensure compassion and consistency across local authority provision of public health funerals. Local authorities should be required to make information about public health funeral public, have a fair system of eligibility and provide a simple funeral service that families can attend.

For further information please contact:

Heather Kennedy

Campaign Manager – Fair Funerals

fairfuneralscampaign.org.uk

[i]

[ii]

[iii]

[iv]

[v]Department for Work and Pensions (2016) Annual Report by the Secretary of State for Work and Pensions on the Social Fund 2015-16

[vi]

[vii]https://www.gov.uk/government/consultations/reforms-to-the-social-funds-funeral-expenses-payments-scheme/reforms-to-the-social-funds-funeral-expenses-payments-scheme

[viii]