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the funeral directors to whom we have spoken have reported a decline in the average revenues earned. In addition, the vast majority have not increased their prices for the funerals they do offer. The ability of people to pay for funerals has also likely reduced given the widespread employment impacts of the lockdown which could drive a greater proportion of basic funerals being sought. This phenomenon is likely to persist beyond the lockdown period as the economy enters a probable recession. Many funeral directors to whom we have spoken also report not charging for all the services they have offered during the pandemic, in their attempt to accommodate the wishes of families in the face of so many restrictions. Examples include recording or live-streaming services, spending time setting up donation or tribute pages on websites, or charging below-cost for a small number of orders of service. Lower average revenues for funeral directors are not necessarily compensated by higher demand, for a number of reasons: • The high death rates attributed to COVID-19 are not uniform across all regions of the UK. A number of the funeral directors to whom we have spoken have not experienced particularly higher demand for funerals but are nevertheless restricted in the revenues they can earn from the funerals they do arrange. • Even in areas with significantly more deaths, this does not always translate into an equivalent demand for funerals. Many families are having direct cremations or very small funerals and postponing more elaborate services until the restrictions are lifted. Funeral directors will not necessarily be approached to arrange these services (e.g. other event organisers would be eligible). • Increased competition from crematoria offering the increasingly common direct cremations may also erode the volume of funerals that firms are able to arrange. Increased activity by crematoria in this market also raises questions around a level playing field between crematoria and funeral directors. • Funeral directors are not all able to expand capacity to meet a much higher demand, for example smaller firms with limited storage capacity, hearse availability and access to additional labour. There is even anecdotal evidence of funeral directors closing due to staff shortages and lack of PPE. 1.2.2 Increasing costs Falling revenues are in some cases accompanied by higher costs, or at least costs remaining unchanged. Cost increases may stem from: • Temporary labour costs to replace employees who are unable to work. A relatively high proportion of employees in the funeral director sector are elderly (including drivers and pall bearers), and thus more likely to be self-isolating or shielded and unable to work. This may require funeral directors to hire additional temporary staff whilst still paying the wages of the permanent staff. Even where staff are furloughed, funeral directors are often topping up salaries in addition to paying temporary staff. • Purchasing of PPE and other equipment. Funeral directors have reported spending thousands of pounds on PPE and other protective equipment such as separation screens for limousines and Perspex covers for Implications of the COVID-19 Pandemic for the Funeral Director Market and the CMA Investigation - 3 - coffins. They have also reported a dramatic increase in the cost of body bags – for example from £5 to £25 per bag. Other costs include equipping staff to work from home (laptops, physiotherapy risk assessments), and expenditure on IT services, online conferencing accounts and telephone bills (which in some cases have trebled). • Other precautions to protect staff and customers. These include more time-consuming ways of working such as sending out drivers in multiple vehicles rather than have staff together in the same car. Funeral directors are also still incurring costs which they cannot directly charge for, for example limousines sitting idle whilst still incurring insurance and storage costs. • Increased wage bills. Some funeral directors have reported that they and their staff are required to work longer hours to cope with the impacts of the pandemic, such as extra cleaning of funeral homes, increased time processing payrolls, and more out-of-hours work in areas where deaths in nursing homes have been particularly high (where the death occurs in hospital the deceased can be collected during normal working hours). In addition, the time taken to arrange funerals over the phone/email is often longer than when the family was visited directly by the funeral director. Significant amounts of time are spent going back and forth with a family before all decisions are taken, and in many cases funeral directors are additionally delivering hard copies of information brochures where families are not comfortable with these being sent electronically. • Investment in capacity to deal with spikes in demand. Whilst many funeral directors have been able to cope with their existing capacity thus far, some have invested in increased capacity, for example converting garages into storage areas and buying / renting refrigerators. This has increased their fixed costs which may not be recovered during the pandemic, particularly if demand is not as high as expected. • Delays in conducting funerals. Funeral directors are typically obliged to continue to store the deceased in the face of delays in holding the funeral – for
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