Funeral Poverty: A plan for managing the impact of funeral costs

Funeral Poverty: A plan for managing the impact of funeral costs A Wiltshire Citizens Advice social policy report This report is supported by Citizens Advice February 2013

Funeral Poverty: a plan for managing the impact of funeral costs Acknowledgements We would like to thank everyone who took an interest in our work and contributed ideas and suggestions. Especially those funeral directors in Swindon and Wiltshire who helped with the design of our survey, took part in it, discussed it with us and offered their continued support to our initiative. We were also guided by colleagues in other Citizens Advice Bureaux, including the national team at Citizens Advice, and by staff from hospitals and local authorities. We have included a number of case studies from our clients, and are grateful to our volunteer advisers for working with them to prepare these. 2

Contents Acknowledgements... 2 Summary and 4-point code... 4 The 4-point code... 5 Introduction: why we are reporting... 6 Scope and method... 8 Questionnaires and interviews 8 Results 8 Main issues... 9 Why shortfalls and debts occur and are increasing 9 Rising costs and reduced government support 9 Can funeral plans help? 10 Local authority fees and charges 11 Unexpected extras 12 Summary and recommendations... 13 Code point 1: awareness... 14 Why is widespread awareness so important? 14 Code point 2: clear and reasonable costs... 16 Why this matters 16 How the funeral industry helps 16 Code point 3: action on funeral poverty... 18 Advisory and negotiating groups 18 Sources of funds 19 Code point 4: public partnership... 20 Hidden costs 20 The costs of turning people away 20 Council funding, linked with its own fees and charges 21 References... 22 Appendix 1: survey of Swindon and Wiltshire funeral directors... 24 Appendix 2: responses... 25 Appendix 3: eligibility for funeral payment grants... 30 3

Funeral Poverty: a plan for managing the impact of funeral costs Summary and 4-point code Wiltshire Citizens Advice (WCA) has been concerned for several years over the number of people they see who have experienced problems paying for a funeral. These problems often lead to debt and anxiety at a time when people are vulnerable due to bereavement. Funerals pose significant financial risks for anyone, especially people on a basic or low income. Funeral costs have been rising by more than inflation, making it all the more difficult to manage money at a time of grief and loss. Dying in the UK now costs over 7,000, on average. With even basic funeral costs now over 3,000, funeral poverty is growing each year (Sun Life, 2012). The full costs may not be realised until it is too late to cut back. In the context of limited financial support available, even for those eligible for state benefits, WCA investigated how good practice might help address the risk factors between a death and a potential debt. This was done by surveying funeral directors in Swindon and Wiltshire and following up the surveys with interviews. Funeral cost equations These figures show the shortfalls that people within different income brackets could expect: UK average (median) income - 26,200 1 Total funeral and probate costs 7,114 2 - savings of ordinary people 1,574 3 = 5,540 shortfall Low-earner - up to 22,000 3 Basic funeral costs 3,284 2 Benefits recipient - low earner s savings 397 3 = 2,887 shortfall Basic funeral costs 3,284 2 - typical benefits-related funeral grant 1,241 4 = 2,043 shortfall NB: Total funeral and probate costs (the costs of dying ) include two elements not covered in the basic costs (Sun Life, 2012). Firstly, discretionary costs of 1,923 for notices and other printing, flowers, additional cars, catering, venue hire and memorials. Secondly, professional fees of 1,907 for winding up the deceased s estate. In practice, most funeral directors offer a simple funeral, closely based on (or perhaps lower than) the basic costs. 1 Office for National Statistics, 2012, 2 Funeral and dying costs, Sun Life, 2012. 3 Income and savings figures, ING Direct, 2012 4 Department for Work and Pensions, 2012 The results were used to develop a 4-point code for good practice to stimulate discussion. WCA hopes that organisations across Wiltshire and Swindon and elsewhere will sign up to this and improve the situation. 4

The 4-point code 1. Awareness All individuals, groups and organisations in contact with bereaved or at risk families and individuals should raise their own awareness levels in order to support others to avoid unexpected and excessive debt. Raised awareness of funeral costs among, for example, community groups, MPs, media, GPs, hospitals and care staff, would mean that they could provide some guidance before those at risk make financial choices that can lead to money struggles. 2. Clear and reasonable costs Funeral directors should clarify all the costs they help manage. This includes their own charges, plus those from burial grounds, crematoria, doctors, florists and so on that they manage and invoice for. The overwhelming complexity of funeral costs can make it hard to understand their true extent, leading to potential over-commitment and a concern among funeral directors that some clients might hold back information about their limited finances. Plain English and access to basic price lists for a simple respectful funeral can also help others to support those who may be at risk. 3. Action on funeral poverty Any shortfall could mean hardship and potential debts, with risks of highcost credit. Local debt-support organisations can help to seek solutions. This might include advisory and negotiating groups, as well as those with access to charitable funding or the ability to fundraise. Local debt action (including budgeting and financial capability education), may help relieve some of the financial burdens and worry. 4. Public partnership Public and voluntary groups can commit to working together for efficiency. Four in every ten applicants for state funeral benefits are eventually turned down. Delay for any reason can contribute to mounting debts. This isn t simply an anxious time for applicants and their families. Hidden organisational costs will be growing, as public bodies and those funded from the public purse try to understand and manage those debts. Coordination between organisations may help reduce a range of benefit-related costs, as well as individual funeral debts. 5

Funeral Poverty: a plan for managing the impact of funeral costs Introduction: why we are reporting WCA has seen many clients who are struggling to pay for the funerals of loved ones, leading to increased levels of debt. This has been due to a number of things including funeral plans or the Government s social fund not covering the whole cost of the funeral and funeral extras that were not budgeted for or were not expected. The Office of Fair Trading (OFT, 2001) highlighted several concerns about the funeral sector and the 800 million spent in the UK on funerals each year. This was over a decade ago, yet many of the problems they identified remain unresolved. When funeral plans fall short A widow in her late 60s, living in Wiltshire with an income of under 600 p/m approached WCA because the funeral pre-payment plan she had paid into with her husband would not cover the full cost of his funeral. They paid 2,527 into the plan and were told it was paid in full in 2009. Her husband died in 2011 and the cost of the funeral was 2,891. The client thought that most of the funeral costs would be paid but the funeral plan company only paid the funeral director 1,576. The funeral director told the client that this company had done a similar thing in the past when not all the payments to the plan had been paid out for the funeral. The funeral plan states that the crematorium company, clergy disbursement fees and the costs for a burial equivalent to a cremation are included in the plan - based on the national averages. However, the contract did not state what the national averages were. The client has had to spend further money in taking the funeral plan company to the small claims court for potential breach of contract. This added to her stress at an already very difficult time. For people on low incomes in the UK the basic problem is simple; they are unlikely to have savings of even 400 (ING Direct, 2012), if anything at all, and the average UK cost of dying is now 7,114 (Sun Life Direct, 2012), with the basic funeral costs exceeding 3,000. For someone earning 22,000 (the current level assumed as low income ), even a simple respectful funeral of around 3,284 may result in unexpected and unmanageable debt. The average ordinary person in the middle faces challenges; in the fourth quarter of 2011 their typical savings of 1,574 also masked unsecured debts of 2,224 (ING Direct, 2012). These data produce our funeral cost equations (see page 4). For many on benefits, low or even average incomes funerals pose a debt risk. Added to this is the reluctance of the public to discuss and plan for their or their family s funeral arrangements leading to the financial implications being widely ignored or misunderstood. According to a survey quoted on the Dying Matters website (2012): 81 per cent of people have not written down any preferences around their own death, and only a quarter of men (25 per cent) and just over one in three women (35 per cent) across England have told anyone about the funeral arrangements they would like to have after they die. 6

The funeral industry (NAFD, 2011) and Government (DWP, 2010) have each highlighted their concerns over the shortfall between the Government s social fund funeral payments and the actual cost of a funeral, and the delays in processing these welfare payments. Wiltshire is among a number of Citizens Advice Bureaux reporting recently on some of the complex debt risks for people on low-incomes, when faced with arranging and paying for the funerals of their families and close friends. Our colleagues in Calderdale (2008) Gateshead (2010) and Bath and North East Somerset (2012) have highlighted concerns, around the limitations of the social fund and the problems with processing claims, as have bureaux across Northern Ireland (2009). However, with welfare reforms and the rising costs of funerals, it is unlikely that more public funds will be available to address the problem of funeral poverty. Therefore it is important that other methods of resolving the burden for bereaved families and for the funeral industry are researched. Our report seeks good practice and aims to raise awareness in order to bring various partners together particularly in Wiltshire and Swindon. Funeral poverty and funeral debt are crucial and growing issues, and our message is that they can be tackled. We are starting with our 4-point code: Code point 1: awareness Code point 2: clear and reasonable costs Code point 3: action on funeral poverty Code point 4: public partnership 7

Funeral Poverty: a plan for managing the impact of funeral costs Scope and method Our report covers what happens between a death and the risk of debt. Using survey and interview, we asked funeral directors and others to explore with us the stages from taking on responsibility for a family funeral, agreeing the arrangements with one of over 30 firms in Wiltshire and Swindon, and how to avoid debt. We also reviewed a wide range of recent reports, spoke to people from other concerned organisations, and took note of local client cases brought to our bureaux. We designed our research on a low-income client s journey from a death to potential debt; surveying four distinct stages (see Appendix 1): the immediate experience choosing a respectful funeral disbursements: the coordination behind the scenes; and social fund applications. Questionnaires and interviews We sent 32 questionnaires to funeral directors in Wiltshire and Swindon. Nine responded and of these nine, six took part in telephone or face to face interviews. At each stage, the funeral directors were asked to state: What seems to work well at this stage, and what might be shared further? Is there anything funeral directors might agree to, at this stage, to help spread good practice? Is there anything others might do to help identify and spread good practice? What are the main problems at this stage? Responses The verbatim responses are in Appendix 2. 8

Main issues Why shortfalls and debts occur and are increasing Funerals are expensive, prohibitively so for many on basic and low incomes. At a crucial and sensitive time, awareness of the costs may be minimal. Important information may even be unwelcome under the pressure to arrange, quickly, a good send off. Misunderstandings can result in large debts, way beyond those already possible with even a basic minimum cost funeral. Funeral prices are rising more than inflation (Sun Life, 2012), and the gap between prices and the ability to pay looks set to increase. Families face increased living costs. Anyone paying for a funeral faces a number of increases in costs. Local councils for example, pressed hard for cash, are charging higher burial and crematoria fees (including those for new sustainable technologies). This comes on top of a decade of increases: in 2010, the DWP used Mintel data to point out that the average UK basic cost (of a simple funeral) was about 2,700: the latest figure for this is 3,284 (Sun Life, 2012). Rising funeral costs continue to outstrip inflation (Sun Life, 2012). According to funeral directors in Wiltshire, a cremation that was 495 in 2010 was 595 in 2011. Swindon has added a further 40 to a 100 increase to cover investments for new environmental legislation on mercury emissions from crematoria. The rising cost of mercury Over the last 20 years, crematoria have helped control polluted air in many ways. But mercury emissions have been rising steadily. Controlling this will need new equipment. By the end of 2012 crematoria were expected to have made substantial headway to meet environmental laws on mercury emissions. Councils are beginning to pass on some substantial costs, as they adapt the equipment at their larger sites. Local councils raise invoices with funeral directors, who then recover the total costs of a funeral from clients under a system commonly known as disbursements. Rising costs and reduced government support Many people are disappointed in the level of government financial support for funeral costs. In some cases someone on a basic or low income may be eligible for a social fund funeral payment from the Department for Work and Pensions (DWP), although most receive much less financial support than they had hoped for (Bath and North East Somerset CAB, 2012). According to the DWP social fund annual report 2011/2012 (DWP, 2012), 69,000 funeral payment applications were received but of these only 38,000 were successful. DWP also describe evidence of the public s belief that, even where their social fund does pay, it will meet the full costs of a funeral. In practice the DWP acknowledge that this is far from the case pointing out that they are only ever offering a contribution, even for a simple, respectful, low-cost 9

Funeral Poverty: a plan for managing the impact of funeral costs funeral. The DWP point out that their average low-income award was 1,241 in 2011/12, against the then UK average basic funeral costs of 2,700. And, although it is outside the scope of this report, evidence from our clients has indicated that pre-paid funeral plans present risks too either because the funds achieved are insufficient or because someone pays far more than they need, putting other living expenses at risk. The Wiltshire and Swindon funeral directors report similar problems with the DWP and the Social Fund to those faced in Gateshead, BANES and Calderdale. This includes the delays in processing claims, the difficulties with eligibility problems and the payment not meeting the cost of the funeral. However the National Association of Funeral Directors (NAFD, 2012a) reports a breakthrough following their lobbying through the All Party Parliamentary Funerals and Bereavement Group, which saw the Government introduce legislation to make social fund budgeting loans available to help with the costs of a funeral. This is good news for funeral directors, as it will help them recover the outstanding costs of funerals. However it will still lead to increased debt problems for many clients because the loans are repaid through benefits needed for basic living costs. Since carrying out our research however, NAFD said (2012b) that the scheme is not yet effective; they say: NAFD has been campaigning for many years and will continue to do so for improvements to the social fund funeral payment, which has not been updated since 2003. However, the Association welcomed the decision on budgeting loans, which was contained in the Welfare Reform Act 2012. Since the loans became available in May except in Northern Ireland which has separate legislation governing the social fund and budgeting loan scheme funeral directors have been expressing concern about their effectiveness and the NAFD would be pleased to hear about specific problems, such as issues with administration, so that it can update the Department for Work and Pensions (DWP). Can funeral plans help? Funeral plans, the detail of which lie outside our current scope, are not a risk-free alternative to debt. The schemes on offer merit independent research, in order to raise consumer awareness about the risks involved in any purchase. People may not understand that funeral plans are savings plans (with some potentially severe payment conditions) and thus may not guarantee that the amount saved will actually cover the cost of a funeral. The success of any such plan depends on individual circumstances, so consumers need information and support in order to make carefully considered purchases. Which? (2012) point out that there are pros and cons to funeral plans, and explain the role of the Funeral Planning Authority. The Which? guidance reflects the principles of our 4-point code: that raised awareness is vital; that the various schemes need greater transparency; and that debt action and public partnership are important, as the costs of plans (and the impact of any potential savings shortfall) may well be outside the means of those on low incomes. 10

Some evidence from our clients has indicated that funeral plans can result in debt either because the funds achieved are insufficient or because someone pays far more than they need, putting other living expenses at risk. Moreover, it could be that people on low incomes may be less able or willing to engage in funeral plans because it will add a further regular payment for families on an already tight budget, although we do not have any specific evidence for this. Sadly, where they do, we have some anecdotal evidence from WCA clients of people whose plan projections show they are unlikely to meet rising costs. In other cases, families are let down when a plan provides far more than is needed and yet the surplus is unrecoverable. Keeping up with funeral plan payments A Wiltshire man in his late 70s told WCA that he is currently paying into three separate pre payment funeral plans. He can ill afford these but is doing so in order to save his relatives having to find the costs of his burial. He was advised to consider stopping the payment on one or more of the plans to increase his income but he said he will lose all the benefits of the schemes if he stops payment. However, even if he continues to meet all the payments on all these plans, he will still be short of funds as the policies will only support part of the costs of a normal funeral. Local authority fees and charges As with most local authorities, Wiltshire and Swindon councils provide or licence burial sites and crematoria services and make charges for each of these. A key issue is to recognise the social policy implications of rising funeral costs and that the local authority can help people on low incomes by making some costs more affordable and working in partnership with others. Nottingham s case study gives just one example: The Nottingham Funeral (Nottingham City Council) Nottingham City Council have developed a low cost funeral for residents and those who have been recently resident, with a price from 1,220. The fee includes the provision of: 1. Taking the deceased from a place of death to the funeral director s premises within two hours of the request being made. 2. A place in the funeral director s chapel of rest where the body may be viewed on request. 3. Care of the deceased at the funeral director s premises. 4. A fabric shroud for the deceased. 5. A choice of coffin from the Nottingham Funeral range. 6. All funeral arrangements (apart from separate charges for a religious ceremony). 7. Where possible circumstances permit, four suitably dressed bearers to carry the coffin. 11

Funeral Poverty: a plan for managing the impact of funeral costs 8. The use of a hearse and following limousine to carry six people. 9. Transport of flowers from the funeral director s premises to the cemetery or crematorium and displayed in the appropriate area. 10. A member of the funeral staff to respond to a call twenty four hours a day, three hundred and sixty five days a year. Any additional items are based on a written quotation provided in advance. Unexpected extras The additional costs of a funeral are also causing problems to many people. Transport, printing and flowers can be costly and unexpected extras. They are included in a range of costs that are commonly referred to as disbursements. Disbursements are on top of most funeral director s fees and charges; and can mount up considerably. Disbursements include some things that most people think of as the basics, such as burial, cremation and doctors fees. This is confusing, as sometimes basic prices may be quoted with the burial or cremation included, and sometimes not. There is no single definition of the terms simple and basic. The funeral director will often try to cover these expenses by asking for a deposit. This covers fees which are paid before a funeral can take place and so are paid by the funeral director regardless of whether their final invoice is paid by the client. Clients, however, often don t understand why they have to pay in advance for a service that has not yet happened and often for items which they didn t realise would be extras. This is why awareness, plain english and clear pricing are so important in our 4-point code. Paying in advance A WCA client in her 20s, who was working less than 30 hours per week and living with friends in Wiltshire, had to arrange her father s funeral. Her parents were receiving income support and disability living allowance. Her father died in hospital in the midlands and the funeral directors wanted 795 up front before they would collect the body to bring him back to Wiltshire. The client could not afford this and wanted to know if there was any help to pay this. The client faced this bill before any other funeral costs. Significant extras An employee of a local funeral director was asked by a customer to design and print an order of service for all the attendees expected at the funeral. The funeral directors said that this additional service would cost the customer an extra 94. The customer was surprised that this service was not included in the overall cost of the funeral. 12

Summary and recommendations The cost of funerals is rising; this is causing hardship for many families and is impacting on the funeral industry. Funeral payment plans and the social fund are not always meeting the cost of funerals; this shortfall can lead to debt. However, to help people overcome some of the problems relating from a death to a debt, and to follow up concerns that we have not been able to tackle in this report, WCA makes the following recommendations: Organisations concerned with debt and bereavement can start addressing the issues by working together to develop and agree our 4-point code based on awareness, clear and reasonable costs, action on debt and partnership working. Further research is needed on funeral pre-payment plans to identify how and why they work for some and not for others, and how they might be improved. That the Department for Work and Pensions works with stakeholders to address concerns about the social fund funeral payment scheme; in particular, the eligibility criteria, application and decision process, expenses covered, clarity of information, and adequacy of the payment. These detailed points reflect our 4-point code and are being addressed nationally by Citizens Advice (2013). 13

Funeral Poverty: a plan for managing the impact of funeral costs Code point 1: awareness All individuals, groups and organisations in contact with bereaved or at risk families and individuals should raise their awareness levels, in order to support others to avoid excessive debt. Raised awareness of funeral costs among, for example, community groups, MPs, media, GPs, hospitals and care staff, would mean that they could provide some guidance before those at risk make financial choices that can lead to money struggles. Why is widespread awareness so important? Raised awareness matters, as very few people know what funerals actually cost. Lack of awareness is what led to the writing of this report and why funeral debt is such a challenge. We consider that advance planning, like budgeting in daily life, is essential if unexpected or unaffordable debt is to be avoided or reduced. Awareness is also a central element of consumer protection law, with its emphasis on understanding any purchase fully. Others can support this principle for those in emotional distress and help ensure that funeral arrangements are affordable. There are many myths and misconceptions concerning funeral charges. For example, that the costs are manageable, that government grants will provide to those in need and that a respectful, affordable funeral may be simple to organise and negotiate. At a time of loss, people may be supported in grief but financially alone. In a time of increasing financial inequality the risks for the minority may be masked by the many people who are provided for in death. Perhaps with money set aside in their estate, a funeral plan or through family members. Death is a relatively rare family event; hence few people are aware of its costs and perhaps assume its arrangements will be affordable. Organisations may make the same assumptions. By the time the deceased s body has been passed to the commercial care of a funeral director, it may be too late for other organisations to help out with financial and other advice. There is also a lack of awareness of the range of alternatives to a traditional funeral some of which offer opportunities to reduce costs and remain respectful. Some of these are discussed on the Good Funeral Guide website (2012) and may provide useful planning ideas. GPs, hospitals, care agencies and hospices: could provide support through some basic information about funeral costs and the simple, respectful funeral offered by many funeral directors. They could support those on low incomes to contact money advice agencies such as Citizens Advice. They need to know, in particular, that eligibility for state benefits almost never means that the full costs of a funeral will be met, and that more than 40 per cent of applications to the Department for Work and Pensions (DWP) have been turned down (DWP, 2010). Local community groups: could help assess and manage the risks in their 14

area and neighbourhoods. For example, they might be well-placed to identify people in their area who could advise on costs and grants, work with local funeral directors to promote simple affordable funerals, and become aware of those who might be at risk. In some areas, it may be an opportunity to negotiate with credit unions, to see if some facilities for low-cost loans might become available. The media and members of parliament: are well-placed to promote the findings of this report and encourage action. Their capacity to open doors is an essential public service. Nationally, funeral debt has been in both media headlines and parliamentary agendas. Solutions may be individual and local, however; with the media well-placed to raise awareness and local MPs able to negotiate on behalf of constituents. Advice agencies: Citizens Advice and other local advice agencies (such as Age UK) could raise awareness by providing leaflets and posters and discussing this expenditure when giving budgeting advice. Citizens Advice is also raising the issue nationally with its current social policy work focus on problems with the Government s social fund funeral payments scheme. They recently published an evidence briefing that is available online. Citizens Advice (2013). In 2013 the Citizens Advice service will take on national responsibility for promoting consumer empowerment, from Consumer Focus and the Office of Fair Trading. This will include helping develop Consumer Empowerment Partnerships, as networks for local action, and in which risks such as funeral debt could be tackled with raised awareness among some of the groups discussed here. Further information is available at: www.citizensadvice.org.uk/consumer Who should take action? You might be An individual or agency in touch with people at risk Someone with ideas or concerns we have not included A person who has influence and could help stimulate innovation A voice of concern, who simply wants to be heard 15

Funeral Poverty: a plan for managing the impact of funeral costs Code point 2: clear and reasonable costs Funeral directors should help clarify all the costs they help manage. This includes their own charges, plus those from burial grounds, crematoria, doctors, florists and so on that they manage and invoice for. The overwhelming complexity of funeral costs can make it hard to understand their true extent, leading to potential over-commitment and a concern among funeral directors that some clients might hold back information about their limited finances. Plain english and access to basic price lists for a simple respectful funeral can also help others to support those who may be at risk. Why this matters Funerals may be complex and unfamiliar. For those on basic incomes they are also costly. Funeral directors can help immensely by coordinating the services of the several organisations and businesses that may be involved. However the language used is often unfamiliar, which can lead to difficulties if a grieving client is unaware quite what they are buying. Some of the social and cultural taboos and expectations about death may intensify these challenges; for example, when someone feels uncomfortable asking about prices or where an expensive expectation (such as lots of flowers) is seen as respectful. Not only is clarity good practice, it is also law. Consumer protection requires that traders provide all the information necessary for any purchase; including the price. So funeral directors do have a duty to spell out costs clearly. From June 2014, the Consumer Rights Directive will be part of UK consumer protection law, including requirements for pre-contract information with total prices and specific agreements from the consumer to any added costs. A simple practical suggestion would be to display the price lists containing the range of options, on the window, and produce small clear leaflets which people can take home and consider before they go back to the funeral director to discuss the detail. The leaflet could also contain a basic budget planner to encourage people to think about what they can afford. This code point matters, but the distress and high costs mean it will not easily resolve funeral debt problems. This is why our other code points are essential, too, and will help funeral directors, as well as consumers. How the funeral industry helps Many funeral directors already adopt codes of good sales practice. These may reflect the directing firm s values, or those of one of their national membership federations (such as NAFD and SAIF). Many firms already respond well to the needs of those on basic incomes, proving clarity and support over the many choices involved in arranging a funeral, including signposting and other help in relation to the social fund. However, funeral directors (and their clients) vary, and the relationship may not always work well. This increases the risks of debt. The challenges are exacerbated because the funeral director usually acts as the booking agent for several services; such as doctor s fees and local authority or private burial or cremation charges. 16

The funeral industry is diverse and varied, and not all directors have been able to adapt to the needs of those on basic incomes. Rising costs and complexity are affecting the funeral industry; with their national associations working hard to highlight the problems of debt and potential debt (NAFD, 2011). Existing codes of practice, if adopted, can help. Such as these from the National Association of Funeral Directors (NAFD) and the Society of Independent Funeral Directors (SAIF): NAFD To give a written estimate of the funeral director s charges and disbursements to be paid on a client s behalf, together with written confirmation of the funeral arrangements in each and every case, as soon as is practicable before the day of the funeral. No contractual agreement will have been entered into until these documents have been accepted by the client. NAFD The funeral director shall have available and on display a price list or lists showing a brief description of The Simple Funeral Service. SAIF Members will provide a choice of at least four coffins at varying prices, one of which will be an inexpensive and plain type, which must be shown in a brochure and displayed in a showroom wherever practicable. SAIF Members must explain their full range of services relevant to the particular client, including the availability of a simple funeral before giving them a written estimate. SAIF All estimates must also itemise each disbursement cost, including cemetery/crematorium fees, doctors fees, minister of religion or officiate, church and associated fees. Where only an approximate cost can be given, it must be made clear that this may vary. The confirmed cost must be supplied to the client as soon as possible. 17

Funeral Poverty: a plan for managing the impact of funeral costs Code point 3: action on funeral poverty Any shortfall could mean hardship and potential debts, with risks of highcost credit. Local debt-support organisations can help to seek solutions. This might include advisory and negotiating groups, as well as those with access to charitable funding or the ability to fundraise. Local debt action may help relieve some of the financial burdens and worry currently managed through longterm debt-repayment arrangements with funeral directors. Inevitably, some local debt action is essential. Funeral poverty is increasing for those on low income or benefits, while any extension of government-funded benefits is unlikely. Local intervention can help broker solutions and address what might appear impossible. Long-term debt repayments with funeral directors may be fraught with risks. Action is needed to help avoid unaffordable repayment terms. And when funeral directors make payment arrangements, they become creditors and may need a consumer credit licence under the Consumer Credit Act, unless the arrangement involves four payments or less. A shift to pre-paid funeral plans may not be the answer either, and we recommend further research on the impacts and risks of these. For these reasons alternative solutions are important, with potential roles for local debt-support organisations. Advisory and negotiating groups Most local authorities support debt action and prevention activity. This includes the CAB service and Money Advice Service, whose role includes giving budgeting advice, maximising income and helping people manage their debts. CAB s debt workload has increased in recent years, with a 27 per cent increase from this time last year (2011) in Wiltshire. But the CAB service and Money Advice Service are by no means the only agencies supporting debt management; with Age UK, for example, supporting older people to claim benefits and manage on limited incomes. There are other examples, perhaps unique to a locality or part of a wider county or national network. The reality, however, is that these groups have to address a wide range of potential debt issues and funeral poverty is but one pressing example. Grief, rather than costs and potential debt, is more likely to be uppermost in the family s minds. A bereaved person may be more likely to be in touch with pastoral, rather than financial, support. Many funeral directors pride themselves on fulfilling such a pastoral role. But the funeral industry is well aware that a pastoral customer relationship can be extremely difficult and potentially compromised - if there is a risk that money may become owing. Bailiffs and court actions are waiting in the wings, as actions of last resort. Co-operative Funeral Services (Debt Line, 2012) report that their average customer currently owes 1,735 to a funeral company. There is room for significant discussion between the voluntary money advice sector and the funeral industry to help clients better plan for their own or the funerals of loved ones. 18

Sources of funds Cases of genuine hardship can sometimes be resolved by calling on local or specialist charitable funds. Benevolent associations, for example, may be able to help current and former employees. In other cases, a local credit union may be prepared to lend money to be repaid on reasonable terms. However, criteria for funds such as these can sometimes be restrictive, leaving debt advice agencies, relatives and even funeral directors hunting for ways to open doors. Sometimes, the only reason this happens is low awareness of the risks of funeral debts. As is so often the case, prevention, or early intervention, is a far better goal. 19

Funeral Poverty: a plan for managing the impact of funeral costs Code point 4: public partnership Public, private and voluntary groups can commit to working together for efficiency. Four in every ten applicants for a social fund funeral payment are eventually turned down. Delay for any reason can contribute to mounting debts. This isn t simply an anxious time for applicants and their families. Hidden organisational costs will be growing, as public bodies and those funded from the public purse try to understand and manage those debts. Coordination between organisations may help reduce a range of benefit-related costs, as well as individual funeral debts. Hidden costs Public services costs are rising, because funeral costs are rising. Inability to pay is shifting substantial hidden costs onto the public purse, including: administrative costs of turning benefits applicants away costs to hospitals and local authorities of providing funerals of last resort where no one else is willing or able to pay costs of funding local advice agencies, to guide on debts associated with a council s own fees and charges. Coordination can help address these and other challenges. The costs of turning people away In 2010, the DWP reported that nearly half of all applicants for funeral grants were turned down. This involves staff time and thus public expense. Other staff costs go in assessments and appeals. If the grant systems were clearer, as the DWP acknowledge they could be, then expectations might be managed more effectively and fewer debts might build up. This could mean less uncertainty, and perhaps less action needed to help people out. Some current approaches represent significant failure demand. The Public Health (Control of Disease) Act 1984 provided for a last resort service for 2,900 people in England and Wales 2010/11. Local councils and health bodies paid an average of 900 for these funerals (LGA, 2011, table 8). However, this figure excludes administrative and staff costs, as well as any repayments eventually recovered from the deceased s estate. Over half the local councils responding to one national survey (LGA, 2010) thought demand and need were increasing. The deceased might have no friends or family. Or they might be unwilling or unable to pay, because no-one can be forced to pay for someone else s funeral. More recently, some local councils expressed concerns (LGA, 2011) that limits, rules and processes in the social fund were deterring applicants, with costs passed instead to local councils. This puts an additional strain on councils who are already trying to manage cuts for funding and other services. 20

Council funding, linked with its own fees and charges Many burial and crematoria charges are set by local councils, as they own these services. These have been rising markedly. If a client cannot afford the fees involved in a funeral another part of the council might be paying for their local voluntary sector, such as Citizens Advice, to advise on how to meet costs and avoid or deal with debt. In other cases a chain of costs might be passed on to the DWP even if, as we ve seen, over 40 per cent of these are ultimately rejected. 21

Funeral Poverty: a plan for managing the impact of funeral costs References Age UK (2010) When someone dies: a step-by-step guide to what to do. Bath and North East Somerset Citizens Advice Bureau (March 2012) Final rights: funeral costs and funeral payments from the social fund. Bath University / Sun Life, Woodthorpe, K (2012) Cost of dying special report: affording a funeral : social fund funeral payments. Calderdale Citizens Advice Bureau (August 2008) Paying for a Funeral. Citizens Advice (2013) CAB evidence on funeral payments from the Social Fund. Debt Line (2012) Co-operative funeral services debt statistics. (online accessed October 2012) Department for Work and Pensions (2010) Social Fund reform: debt, credit and lowincome families. Department for Work and Pensions (2011) Bereavement benefit for the 21st Century. Department for Work and Pensions (2012) Annual report by the Secretary of State for Work and Pensions on the Social Fund 2011/2012. Department for Work and Pensions (online) A guide to funeral payments. DirectGov (2012) (online) Arranging a funeral. Dying Matters (2012) Why talk about it? Key facts, (online, accessed October 2012) Gateshead Citizens Advice Bureau (January 2010), A respectable funeral. Good Funeral Guide (2012) www.goodfuneralguide.co.uk. ING Direct (2012) Consumer savings monitor: full report and methodology, quarter 4 2011. LGA (Local Government Association) (2010) Public health funerals: a survey of authorities in England and Wales, 2010. LGA (Local Government Association) (2011) Public health funerals: a survey of authorities in England and Wales, 2011. NAFD (National Association of Funeral Directors) (2009) Code of Practice. Solihull NAFD NAFD (National Association of Funeral Directors) (2009) NAFD steps up social fund campaign (online press release) NAFD (National Association of Funeral Directors) (2011, online) NAFD tells Minister the Social Fund is failing, (report of parliamentary representation) NAFD (National Association of Funeral Directors) (2012a, online) NAFD celebrates victory over social fund funeral payments 22

NAFD (National Association of Funeral Directors) (2012b) Problems with Social Fund budgeting loans, press release, September 2012. Northern Ireland Citizens Advice Bureau (2009) Funeral payments made under the Social Fund: briefing to Committee for Social Development. Nottingham City Council, The Nottingham funeral, online, accessed October 2012. Office of Fair Trading, (2001) Funerals: a report of the OFT inquiry into the funerals industry. London:OFT Office for National Statistics (November 2012) Annual survey of hours and earnings, 2012 provisional results. Slater, Ashfa (2010) The Social Fund: customer experiences and perspectives: qualitative research with Jobcentre Plus customers. A report of research carried out by ECOTEC on behalf of the Department for Work and Pensions. London: Department for Work and Pensions, Research Report No 625 Sun Life (2012) Death shouldn t mean debt: responsibility, choice and selflessness: the Sun Life direct cost of dying survey 2012 (Mintel Consumer Research Study) Which? (October 2012) Is it too expensive to die? It is if you can t foot the bill (online, accessed October 2012) Which?, How secure are funeral plans?, online, 2012. 23

Funeral Poverty: a plan for managing the impact of funeral costs Appendix 1: survey of Swindon and Wiltshire funeral directors Our questionnaire followed five stages, aiming to identify how good practice might help address the risk factors between and a death and a debt 1. The immediate experience 2. Choosing a respectful funeral 3. Disbursements: coordinating behind the scenes 4. Social fund applications 5. Paying, and debt management, if on low income Any other comments: what else might be improved, and how? Questions we asked at each stage What seems to work well at this stage, and might be shared further? Is there anything funeral directors might agree to, at this stage, to help spread good practice? Is there anything others might do to at this stage that would support good practice? What are the main problems at this stage? 24

Appendix 2: responses The immediate experience: What seems to work well at this stage, and what might be shared further? Supplying a booklet to hospitals, hospices and nursing homes on what to do after a death to give the family the first insight. I do urge all those who speak with bereaved people immediately after the death, if they believe there is a financial problem and the family is worried, to speak openly about the situation with the funeral director at the earliest opportunity. Most funeral directors will be able to help in a variety of ways and I can honestly say that no client has been turned away for want of money. There are many avenues open to the family but it is important that they declare their situation at the outset. We meet it often and can always find a way to help and give the deceased person a dignified funeral that will meet the needs of the family. People will not get into debt if they tell us honestly, at the outset, what is their situation and how much money they as a family can find to meet the funeral costs. Honesty between the bereaved and the funeral director is essential. Frank and honest communication with the bereaved family clearly stating cost of funeral. Is there anything funeral directors might agree to at this stage, to help spread good practice? Supplying written information to hospitals, hospices etc outlining the initial costs. Assist family with guidance on how to pay funeral costs e.g. social fund etc. Is there anything others might do at this stage that would support good practice? The DWP should give an immediate decision as to whether the claimant is going to get assistance. What are the main problems at this stage? Families not having arranged a funeral before will have no idea of cost. Some are surprised at cost either its more or less than they thought. No decision from the DWP. Choosing a respectful funeral What seems to work well, and might be shared? Advise the family. Keep costs down to a minimum. As part of the Code of Practice of the National Association of Funeral Directors all member firms ensure clients are given a detailed written estimate at the time of arranging the funeral. This means that there are no unexpected charges or fees and the Client knows their commitment from the outset. 25

Funeral Poverty: a plan for managing the impact of funeral costs Honesty is the best policy. If a family explains they have limited funds available then they are made aware of options available to them to keep costs low e.g. cheaper coffin, smaller flowers. Guidance to family showing them the cost of certain items which they might not be able to afford. Is there anything funeral directors might agree to, to help spread good practice? Point the family in the direction of any benefits available DWP, British Legion, SAAFA for help with the final payment. The person on a low income is helped to choose their funeral much like anyone else. They tell us what they want and we will advise them whether this is possible within their budget. If there is no money at all and no means of obtaining any help for them, a dignified and very simple funeral can be arranged through the hospital contractor, if the death occurred in hospital or the Local Authority contractor if the death occurred at home or other place. All National Association of Funeral Directors members offer a Simple Funeral to all clients, which ensure a respectful, dignified funeral is available to everyone. We know roughly what money is likely to be available from the DWP and if the family are eligible, because of their income (or lack of it) and the benefits which they are claiming, we will guide them to arrange a funeral which keeps, as far as possible within their budget. There is always some shortfall but this is pointed out to the client when the estimate is given. Yes; monthly payment terms. Is there anything that others might do to help identify and spread good practice? Make things easier for families claiming from DWP or any other organisation. Yes; be honest. What are the main problems at this stage? A funeral needs to be arranged to enable a price to be discussed. Clients do not let the funeral director know that they can not pay but still order limousines, press notices and floral tributes. Identifying who is on a low income. Disbursements: coordinating behind the scenes. What seems to work well, and might be shared further? Most funeral directors take disbursements before the funeral but in the case of a DWP claim, the family may not have these to pay. This is not a separate issue. If a funeral director knows the client s situation the disbursements will be kept to a minimum and the family will be guided to ensure this. Funeral directors pay the disbursements for the family so it is not in their interests to allow unmanageable fees to be incurred. Is the client able to pay all of the disbursements? 26