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Pandemic and energy crisis are reshaping funerals in the UK

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Edward Cutler knows a lot about a very particular sort of international travel.

The company he runs, Slaters International Funeral Directors, specializes in repatriating people who have died in the UK. It has a fleet of private ambulances that transfers them from around Britain to be flown out of Heathrow or Gatwick airport. Like the rest of the UK, he is worried about energy prices.

“We have always charged a flat rate no matter where the deceased is resting. But it’s getting to the point where we may have to think about charging a mileage cost on top, just due to the additional cost that it’s costing us for the fuel,” he told the Financial Times.

Diesel and petrol for the ambulance fleet has gone up £400 to £500 per month in the past year from £1,300, while fuel surcharges for cargo bookings on commercial aircraft are also affecting the business. “All these little things start to add up,” he said.

Before the pandemic, the UK’s £2bn a year funeral services industry, which is mostly self regulated, had come under heavy fire for high prices, a lack of transparency and the mis-selling of pre-paid funeral plans.

Now, with a combination of the war in Ukraine, Brexit and supply chain hangovers from the pandemic, staff are in short supply, wages are higher and inflation is showing up everywhere from stationery to cremation costs.

Clare Montagu, chief executive of Poppy’s Funerals in south London, said the company’s energy bills alone had gone up 20 per cent since the start of the year and she expected them to rise again as the company reached the end of its supply contract in January 2023 .

“We don’t particularly want to pass on all of those costs but I think it’s probably the case that we will look to do so.”

Independent funeral directors are responsible for around two-thirds of funerals not provided under prepaid plans, according to the National Society of Allied and Independent Funeral Directors (SAIF).

It is harder for these small businesses to absorb the extra costs but this is what most are doing at the moment, said Terry Tennens, chief executive of SAIF. But he is sure how long this will last. “Really D-Day is next year when some of these utility contracts come up for grabs.”

The two big funeral providers in the UK are also showing signs of strain.

In the first half of the year, profits at Co-op Funeralcare were down almost a third, while Dignity made a pre-tax loss of £156mn. It has said it is considering a temporary fuel overload for cremations because of high energy costs.

Gill Stewart, chief operating officer at Co-operative Funeralcare, said the company had not passed on higher prices to clients but might have to do so, particularly some energy costs and price rises by third-party suppliers such as coffin manufacturers.

“Clearly energy is the one that probably is the most obvious for people to look to,” she said, “but there are a number of other areas” where the company is feeling inflationary pressure.

During the pandemic, funerals had to change because of the restrictions on face to face contact.

Last year, almost a fifth of funerals were “direct cremations”, also known as unattended funerals. There is no hearse, procession or funeral service and they can cost less than £1,000, compared with £3,700 on average for a cremation.

Kate Davidson, chief executive of Dignity, said only a small percentage of customers opted for this stripped down service and at Co-operative Funeralcare it was around 10 per cent, according to Stewart.

But Declan Maguire, a director at SAIF, has observed other changes in the industry. “Covid was a game changer in terms of making everybody stop and think about what they do and how they do it.”

Maguire, who is also a director of the family-run business, Anderson Maguire, in Glasgow, added: “We’re seeing people taking a little bit more time thinking through the options that they’ve got.”

Davidson said people were certainly becoming more “savvy” about inquiring about their options.

In 2021, changes recommended after an investigation by the Competition and Markets Authority came into force. These include an obligation for funeral directors to provide standardized information about prices and a ban on soliciting business through relationships with hospitals, care homes and hospices.

As of this year, funeral plan providers must also be authorized by the Financial Conduct Authority.

“The funeral sector has been making massive margins for the last decade or two. There was absolutely the fat there to improve standards and protections for consumers,” said James Daley, managing director of Fairer Finance.

Cutler believes that the combination of the pandemic and the cost of living squeeze will change things permanently.

“I think a lot of funeral directors are probably going to restructure their business moving forward, even before the energy prices. . . a lot of people have thought it was simpler during Covid and everyone got through it and I think a lot of people think now there’s better things to spend money on than extravagant funerals.”