Funeral Plan Industry

Fleur Anderson Excerpts

Thursday 26th May 2022 Westminster Hall

[Fleur Anderson (Putney) (Lab)]

It is a pleasure to serve under your chairship, Mrs Cummins, and I congratulate the hon. Member for Telford (Lucy Allan) on securing this important debate on an issue that I agree needs far more attention. I am surprised that there are not more Members present, but I am delighted that we are able to debate these issues. Although they are important for the Treasury, they also go well beyond its remit and are relevant to other Departments, including the Department for Work and Pensions. There needs to be a much more joined-up approach, but I thank the hon. Lady for bringing to the attention of the House the issues raised by the collapse of Safe Hands. The issues apply to funeral plans generally and wider still to the subject of funeral poverty. I will talk about all of those issues.

I want a society in which everyone can provide a dignified funeral for their family and friends without fearing how they will pay for it or going into debt afterwards. I pay tribute to Quaker Social Action and its Down to Earth campaign for all it has been doing on funeral poverty. I am a member of the all-party parliamentary group on funerals and bereavement, and pay tribute to all the funeral directors who have been working so hard throughout covid, in really difficult and constantly changing circumstances, to provide a crucial service at a time of great need, tragedy and bereavement for so many constituents across the country.

Funeral poverty is when the price of a funeral is beyond a person’s ability to pay. It is estimated that 9% of people in the UK are in funeral poverty, so this issue affects people in all of our constituencies, but I agree with the hon. Member for Telford that we do not hear from those constituents very much. At a time of bereavement, writing to their MP about the issues they are facing is not the first thing people think of. Many people are suffering in silence, but there is so much more we could be doing to support them in their time of need.

The UK Government are legally bound by international law to respect, protect and fulfil their citizens’ right to the highest attainable standard of mental health. They cannot claim to be upholding that obligation when so many bereaved people in this country experience a significant toll on their mental health because of worries about funeral costs—worries that drive them to buy funeral plans, worries that drove those who have suffered from the Safe Hands scandal. People want to do the right thing. They do not want to be a burden to their loved ones; they want to make sure they are providing. Funeral plans, but also the high cost of funerals in general, are not enabling them to do that.

According to SunLife, funeral prices have more than doubled since 2004. The average cost of a basic funeral is now £4,056, but it is higher in London, and in other places it is considerably higher. It is a huge amount of money. In 2022, SunLife found that 17% of families experienced notable financial concerns when paying for a funeral. Those who struggled had to pay an average of £1,800. Taking on debt in different forms featured highest in how that group made up the costs. For example, 27% of people borrowed from a friend or relative, 22% maxed out a credit card, 17% paid the funeral director in instalments, and 10% borrowed money from a loan provider, such as a bank or a loan shark. Some 16% have had to sell belongings to pay for the funeral of their loved ones. Rightly, those people want to do the right thing. They want to have the most dignified funeral and ensure that they are saying goodbye in the best way, so it is understandable that they want to pay for a funeral plan, but surely there should be another way.

There are three key factors behind the rise in funeral poverty. The first is that the funeral industry is unregulated, meaning that prices can vary dramatically from one funeral director to the next. Until the recent legal order from the Competition and Markets Authority, funeral directors did not even have to display their prices to customers, and many are still failing to comply with the order, eight months on. I have done my own research and gone on the websites of funeral directors to try to compare prices, and it is really hard to do. If someone goes into a shop, they are not told, “Go and pick up whatever you want. Get the right thing and off you go, but we’re not going to tell you what the price is.” At a time of bereavement, when people do not want to be shopping around, they often rely on a word-of-mouth recommendation from someone who has used a funeral director in the past. People need more information, but it is just not there, or it is not easy to find. The CMA recommended that the Government establish an inspection and registration regime for funeral director services, but the Government have said that they will only take a co-regulatory approach with the industry, so people cannot be guaranteed what service they will get when they choose their funeral director.

Secondly, there is limited public awareness of the price differences. Many bereaved people in a state of grief will not shop around, as I have said; they will opt to get organised as quickly as possible. Thirdly, existing Government support is inadequate, and it has been for a long time. This is where the Treasury comes front and centre. In 2020-21, an average award from the funeral support payment in Scotland, and from the funeral expenses payment in the rest of the UK, was only 44% of the average cost of a basic funeral. The application process for the funeral expenses payment is complex and confusing. In the same period, only 68% of applications were successful.

The DWP established the FEP in 1989 to cover the cost of a basic funeral for those who cannot afford one, and the number of applications is rising. In 2020-21, the average award was £1,838, which falls way short of the average cost of a funeral, leaving a shortfall of thousands of pounds. Many people on low incomes, such as students and low-paid workers, are not eligible for the FEP if they are not on certain in-work benefits, and working out who is eligible and who is not is very confusing. The claimant, and often family members, need to be on certain benefits to apply, and the application process can be complex and confusing. At a time when bereaved people struggle to absorb information, they are least able to work out very complex financial procedures. The eligibility criteria need to be simplified to allow payments to reach more people.

I have in front of me a table showing the applications and awards for social fund funeral expenses payments. In 2010-11, there were 69,000 applications. By 2019-20, the figure had gone down to 37,000 applications, rising to 47,000 applications the next year. That is not an indication of less need, but of how the fund is failing people who are most in need. Despite improvements, processing times still mean that grants are often paid after a funeral has happened, resulting in people needing to commit to a funeral without knowing whether it will be funded, and without the means to raise the funeral deposit. They still have to sell their belongings, or go to a loan shark or relatives, to get the money up front, because they do not know whether they will get the funeral expenses payment afterwards, so it really defeats the point.

The FEP is made up of two parts: the cemetery or crematorium fees and doctor’s fees, and an amount towards other funeral expenses, including the funeral director’s fees. The “other funeral expenses” element of the funeral expenses payment was increased from £700 to £1,000 in April 2020—the first increase since 2003—but it still falls far short of the money needed. Accessing public health funerals, which is another option that has been mentioned already, is really difficult and has high levels of stigma. People do not feel that a public health funeral is an acceptable and dignified send-off for their relatives, but that could really change if we wanted.

What needs to happen? We need to increase the amount of the FEP and FSP to cover the actual cost of a basic funeral. We need to revise the eligibility criteria for the FEP to enable more people to access it, along the lines of the much more flexible and inclusive FSP brought in by the Scottish Government. We need to establish an independent inspection and registration regime for the funeral industry, as recommended by the CMA, leading to full-scale regulation and price controls for funerals. The prices cannot just keep on going up exponentially. We need to create statutory minimum standards for public health funeral provision. The current guidance is just that—only guidance—and it is not being followed by a significant number of local authorities.

Just imagine, if you will, Mrs Cummins—I hope I can recruit a lot of people to my campaign with this—that if someone wanted to organise a funeral for their loved one, they could go to their local council website and easily find a well signposted package for a highly dignified but affordable funeral, available to all and negotiated with local funeral directors. That would give everyone the option of not feeling the pressure to get a funeral plan, but also not having to spend ever-increasing amounts on expensive funerals. In fact, that could be the norm. It would have to be negotiated with local councils, and it could be done with the Government, local councils and industry working together. That would be a paradigm shift and would be fantastic. I would definitely opt in for that kind of funeral—one that is affordable, but dignified.

I welcome the regulation of prepaid funeral plans, but we need the Financial Conduct Authority to be proportionate in its approach to that regulation. Does the Minister know how many consumers will be left without a funeral plan should their firm not qualify for the upcoming regulation? Will the Government put in place a financial support package to protect consumers should their plan provider fail to achieve FCA authorisation?

The Safe Hands collapse must be a wake-up call, not only for the industry but for Government. I hope to see a wholly different approach, with the Government and industry working together. Funeral cost options are not clear, fair or competitive, and they take advantage of people at their most vulnerable time. Many funeral plans are ripping off people who want to do the right thing and not be a burden to their loved ones. Grief is a human right, not a luxury.