The UK’s biggest funeral director has warned that funeral homes could go bust without government support because they are shouldering the cost of staging stripped-back services for coronavirus victims.
The Co-op, which carries out 100,000 funerals a year, is asking the government to step in and support the industry. “We have been very clear with the government,” said the Co-op chief executive, Steve Murrells. “Without financial help for the sector. There will be many businesses that won’t survive this Covid-19 period.”
The key problem facing funeral directors is that coronavirus funerals are taking place with just a handful of mourners present and families do not require costly extras – where funeral services make their profit – such as limousine hire, flowers and chapel of rest viewings. Many families are also opting to buy cheaper caskets and there has also been a rise in inquiries about direct cremations, also called no-frills cremations, where there is no funeral service at all.
At the same time funeral homes are facing additional costs such as personal protective equipment (PPE) for staff, the hire of additional mortuary space and live streaming services.
Murrells said: “The lockdown requires a simpler funeral which, if the volumes continue in the way that they are, will bring a huge strain on the profitability of the market.”
“The traditional funeral allows the family to bolt on additional requirements,” explained Murrells. “What’s playing out now is the most basic of service and the physical increase in volumes, albeit as high as it is, in no way is offsetting the running costs and lack of ability for customers to have additional services.”
The Co-op said the restrictions faced by its funeral business, coupled with the cost of recruiting 5,000 additional staff to keep the shelves full in its food stores, could add up to £275m to its running costs this year.
Funeral costs have come under growing scrutiny in the UK with the competition watchdog in the middle of a market investigation. The Competition and Markets Authority (CMA) flagged that prices had increased by 6% a year – twice the inflation rate – for the past 14 years.
The average cost of a basic funeral rose 3.4% to £4,417 in 2019, according to an analysis by SunLife. Of that figure the funeral director’s fee, which typically includes the coffin, a hearse and collection and care of the deceased, was £2,687. Both the Co-op and Dignity, the UK’s second largest firm, have been cutting their prices, with sales at the Co-op’s funeral business falling 3% in 2019 and profits almost halving to £14m.
Jon Levett, the chief executive of the National Association of Funeral Directors which represents more than 3,700 UK funeral homes, said UK funeral directors were under enormous pressure as they dealt with thousands of additional funerals every week.
“Many of the costs are either fixed or have increased, such as staffing, and the cost of some supplies such as PPE, yet their income has dropped significantly as funerals during Covid-19 are restricted to very simple and small services,” said Levett.