Business Economic Notes 6
Funeral Directors
These notes are issued to Inspectors of Taxes to assist them in examining accounts. They are intended to provide a general background to the trade, with some explanation of its most important features. Business Economic Notes are not intended to provide an exhaustive or definitive picture of any particular trade or profession.
Contents
6. The death grant and assistance with funeral expenses
7. The National Association of Funeral Directors subscription
9. Costs and margins of funeral directors
Appendices
1. NAFD Association and membership information
1. The funeral business |
In England alone there are 500,000 recorded deaths each year and as the numbers of elderly continue to grow, so too with the death rate.
The industry as a whole is heading towards a boom period. This trend however is unlikely to see any expansion in the small family business, but will see the larger corporations growing from strength to strength, mopping up the smaller businesses at an ever increasing rate.
There are now around 2,000 such small businesses, each performing, on average, about 180 funerals a year and they continue to face mounting difficulties caused by a combination of social and economic circumstances.
Ownership previously passed from generation to generation, but increasingly there is no son or daughter willing to learn the business and the majority no longer survive the death or retirement of the present owners.
Added to this, is the ever growing problem of staying in business with continuing high labour costs and other overheads. High interest rates and minimal cash reserves, mean that even an unexpected vehicle breakdown can precipitate a crisis.
More and more of these small businesses are opting to sell out to the major corporations whilst demand for acquisition is high, to free themselves from the burden of trying to maintain a viable business. The trend is for large companies to buy out the small business, retaining the present proprietor as a local manager so preserving the local goodwill and contacts he has built up. The larger corporations can usually achieve savings by centralisation of branch administration functions including centralised computer invoicing and bookkeeping systems. One of the larger corporations achieves further savings by using its own crematoria.
2. What is a funeral director |
'A Funeral Director is a man who can enter a house where death has occurred and take upon himself the whole responsibility of organising and equipping a funeral ...... he is a technical adviser, agent, contractor, master of ceremonies and custodian of the body of his client' - a quotation from the official manual of Funeral Directing.
The role and image of the undertaker has changed a great deal in the last 50 years. Apart from now being called a funeral director, he no longer holds the same, somewhat awesome, place in society that he once held. He is now a member of an essential service industry, his approach is more helpful and professional and avoids the mystique and sombre behaviour in manner and dress of the undertake of old.
The modern funeral director is usually a member of the National Association of Funeral Directors. Within the constraints and pressures of running a viable business, he abides by a voluntary code of practice laid down by his Association (see Appendix 1).
As with any other service industry, funeral directors are open to complaints by the public and the Association has its own conciliation and arbitration machinery for disputes.
3. The funeral |
When death occurs, it has to be registered at the office of the Registrar of Births and Deaths. Provided an inquest is not required, the registrar will issue a certificate of disposal, authorising either burial or cremation.
Before a body can be cremated, five certificates are required, the Registrars Certificate, certificates from two doctors, a further form of application for cremation normally supplied by the relatives or executors and a final form by the medical referee at the crematorium, allowing cremation.
The first medical certificate is provided by the practitioner who attended the deceased during the last illness and the second certificate from another doctor, not a member of the same practice, confirming the death details. A charge is made for both these certificates and fee levels are as follows:-
1979/80 - £11.45
1980/81 - £13.75
1981/82 - £13.75
1982/83 - £15.50
1983/94 - £16.80
1984/85 - £17.75
1985/86 - £18.65
Funeral directors are normally involved in paying for both certificates, either to the hospital authorities or directly to the doctors.
Where the coroner makes an examination or holds an inquest, he issues a form permitting cremation, which removes the need for the two separate doctors certificates.
Once the statutory certificates have been obtained, anyone can arrange a funeral with a cemetery or crematorium Few people, however, have either the knowledge or inclination to do so and almost invariably they employ a funeral director.
A funeral director will arrange the entire funeral if required and in the majority of cases all arrangements are left entirely in his hands, apart from perhaps flowers and catering.
NAFD members are required by their code of practice to offer a simply basic funeral, which includes a coffin, removing the body (or delivering a coffin) within a certain area, care of the body (stating whether this includes embalming), hearse, one car to the nearest cemetery or crematorium, supplying the necessary staff and making the arrangements. A written estimate of the total charge will be given and customers requirements are discussed in detail. Some funeral directors fill in a confirmation of arrangements, detailing requirements and specifications, a copy of which is then given to the customer. The discussion of funeral arrangements usually covers the following detailed points:
- Place of rest - either chapel of rest or private residence.
- Jewellery - are rings to be left on body or removed.
- Embalming - the normal type of temporary preservation is carried out by the injection of a fluid arterially, rending the body hygienic, preventing the risk of infection and at the same time presenting a more pleasant appearance. An extra charge for the service is sometimes made, although some funeral directors include it in their overall charge. The use of refrigeration or embalming or both is essential in most cases, especially if there is to be any delay in the funeral arrangements.
- Viewing arrangements - viewing at the chapel of rest may be at any time or by appointment.
- Coffin - choice of coffin and fittings. A cheaper coffin is usually used for cremations and any fittings will be in combustible plastic.
- Dress - the body may be dressed in ordinary clothes or have a simply robe or shroud.
- Date and time of funeral - there is usually an extra charge for a Saturday funeral.
- Place of funeral.
- Transport - type and number of vehicles in funeral cortege and whether return journey to home or reception also required.
- The service - type of service either at church, crematorium or cemetery chapel or graveside or both, and choice of music.
- Press notices.
- Flowers - if arranged by the funeral director he may receive a commission from the florists.
- Catering - very rare for the arrangements to be left to the funeral director, with the exception of the North of England where catering is often arranged by the funeral director.
- Disposal of ashes - these may be scattered in the crematorium garden of remembrance, kept in an urn at the crematorium with a plaque above it or buried in the crematorium or cemetery. Relations have the choice of keeping the ashes or scattering them or of disposing of them in any other legal way.
- Memorials - usually attended to after the funeral. For cremations, the most usual form of memorial is a written entry in a book of remembrance or the planting of a rose tree or bush in the crematorium garden or a small wall plaque.
4. The charges |
Charges are much the same for both burial and cremation. However, burials can be made more expensive by the cost of the plot which can vary enormously.
According to the National Association of Funeral Directors, the average cost of a funeral in 1983 was £461 and in 1984 was £538. Costs do, of course, vary regionally with prices being higher in London and the South East, reflecting higher overheads and labour charges.
The major part of the account is the funeral director's bill, covering the coffin, robe, hearse, cars, removal and transportation of body, keeping it at the chapel of rest, embalming, his staff as bearers and his own service. The second half of the account covers the payments made by the funeral director on behalf of the family, such as:
- The grave
- Cremation fees
- Burial of Ashes
- Minister's fee and travelling expenses
- Church fees
- Flowers
- Press notices
- Medical certification fees
Occasionally a service charge may be added to the disbursements covering the funeral director's charge for making the arrangements. A discount calculated on the funeral directors charges is sometimes offered for prompt payment.
Children's funerals cost less than the average, and usually on a sliding scale, with charges ranging from as little as £20 to the full adult rate.
5. Coffins |
The basic component of any funeral is the coffin. The vast majority of coffins are made of veneered chipboard and purchased from a coffin manufacturer in shell form or as a set of shaped boards, for assembly by the funeral director. In both types, the funeral director finishes the inside trimmings and furnishings.
Coffins in sold wood are also available, but demand is less owing to the substantially higher costs.
Some examples of typical coffin cost are as follows:-
Price Com report NAFD
|
1/9/76 |
80/81 |
81/82 |
82/83 |
83/84 |
84/85 |
|
Coffin Sets |
||||||
|
Veneered Chipboard |
£7.70 |
£17.50 |
£18.30 |
£19.00 |
£20.00 |
£21.00 |
|
Solid Oak |
£27.00 |
£84.00 |
£92.00 |
£100.99 |
£107.00 |
£115.00 |
Coffin Shells |
||||||
|
Veneered |
£14.00 |
£28.60 |
£30.00 |
£31.00 |
£32.50 |
£34.50 |
|
Solid Oak |
£42.00 |
£119.00 |
£131.00 |
£143.00 |
£153.00 |
£165.00 |
Fully finished Coffins |
||||||
|
Veneered Chipboard |
£26.00 |
£39.50 |
£42.00 |
£44.00 |
£46.00 |
£49.50 |
|
Solid Oak |
£60.00 |
£138.00 |
£152.00 |
£165.00 |
£180.00 |
£192.00 |
6. The death grant and assistance with funeral expenses |
The death grant, introduced in 1949 to help with the cost of a funeral, is now £30. (This is the maximum, the grant is smaller for a child e.g. £9 for an infant under 3.)
The Local or Health Authority will arrange and pay for a simple funeral if there are no relatives or if no-one in the family can afford (or is willing) to pay for a funeral. Funeral directors charge less for such funerals, but they do them at their own convenience - for example, by disposing of the body at a time which suits them. The family is unlikely to have any say in what arrangements are made. The DHSS will normally pay for the essential parts of a private funeral for a close relative if the person arranging it is receiving supplementary benefit and has less than £300 in savings.
7. The NAFD Subscription |
Subscriptions for membership are payable on a scale ranging from
Grade I - Funeral Directors carrying out up to 50 funerals a year to
Grade IX - Funeral Directors carrying out more than 3,000 funerals a
year.
For scale of fees see Appendix 2.
8. Funeral directors charges |
A charge for any funeral includes
- Disbursements made on behalf of the client (over which the funeral director has no control) and
- Charge for services provided by the funeral director
A rough analysis of a funeral director's basic minimum charge for a burial can be seen in the following table which shows that disbursements normally account for some 30% of the total charge. The proportion is similar for a cremation.
|
A* |
B+ |
A* |
B+ |
||
|
|
|
||||
|
3% |
8% |
Other (flowers, press notices etc) |
|
|
|
|
5% |
7% |
Church |
Disbursements |
30% |
|
|
22% |
15% |
Costs/charges (medical certificates cemetery/ cremation fees, etc) |
|
30% |
|
|
20% |
26% |
Funeral directors attendance supervision and overheads |
|
70% |
|
|
|
12% |
Bearers |
Services provided by funeral directors |
70% |
|
|
15% |
20% |
Vehicles |
|
|
|
|
29% |
12% |
Coffin |
|
|
* As per findings of the Price Commission Report in 1976, average funeral £180.
+ As updated for 1985 taking average cost of £575.
9. Costs and margins of funeral directors |
The Price Commission Study in 1976 came to the following conclusions and by and large they are still of relevant today
Research revealed a wide spread of prices, both within the same category of firms and within the same regions. These differences arose from such factors as
- differing quality of service
- location of business
- relative efficiency of firms
- variations in target profit margins
Considerable variations were found in hours expended per funeral both
regionally and by size of firm. On average, firms carrying out 500 funerals
annually were the most efficient users of labour.
Larger firms generally charge more than smaller firms in spite of apparent
economics.
In determining their charges, funeral directors gave most weight to achieving
a particular percentage profit margin. The smaller firms tended to have
a target of cash profit.
The wide range of prices revealed by the enquiry suggested that where
this is competition, it is generally not on price but on quality of service.
For the reasons brought out in the Price Commission Study it is difficult to give any precise information on achievable profit rates or average profit per funeral taking into account charges and disbursements.
Appendix 1 - National Association of Funeral Directors |
Objects of the association
These are
- To organise, watch over, maintain, promote, protect and assist the rights and interests of members of the Association, of all funeral directors, funeral vehicle owners generally, and other persons interested or concerned in the objects of the Association and to give such members and other persons the means and advantages of association and united action.
- To secure the registration of funeral directors.
- To secure and maintain high standards of qualification for all who seek to practice as funeral directors and the recognition of a code of professional conduct.
- To encourage, by the provision of lectures and teaching, the study and practice of improved methods of funeral directing and all subjects incidental thereto and to provide for the holding of examinations and for the award of diplomas and certificates of proficiency therein.
- To promote the information within the Association of Area federations and local associations.
- Such special sections as appear necessary for the proper fulfilment of these objects.
- To provide machinery for the settlement of disputes between members of any section of affiliated organisation forming part of the Association.
- To facilitate the interchange by members of the Association and of the aforesaid trades and businesses of their views with regard to matters of common interest and to promote the consideration and discussion of all questions affecting the same.
- To print and publish any periodicals, books or leaflets that the Association may think desirable for the promotion of its objects.
Membership
Rule 6 of the Association articles states that the Association is a continuation of the British Undertakers' Association, with which the British Embalmers' Society was amalgamated and that it is a combination of area federations, local associations and affiliated organisations of persons and corporate bodies directly (but not necessarily exclusively) engaged in the aforesaid businesses and those allied thereto, and such other persons as may be from time to time admitted to membership under the Association's rules and bye-laws.
Under Rule 6 membership is offered to persons and corporate bodies directly (but not necessarily exclusively) engaged in practice as funeral directors.
Membership in practice is granted to businesses and companies and not individuals as such, so that it is a business whether or not a corporate body which is the member, and not the individuals who are engaged in carrying on that business either as employees or as partners or officers of a corporate body.
Code of practice
(Summary)
The code of practice highlights the basic relationship between a funeral director and his client and guides the public to expect good service from this relationship. In principle the Code guarantees to the public:
- The integrity - of a funeral director
- Value for their money
- Dignity as a profession
- Provision of a basic funeral where required
- Itemised charges
- A written estimate
- Professionalism in all they undertake
- Sponsorship by a valid National Association
- Conciliation and Arbitration for dissatisfied clients
Appendix 2 - National Association of Funeral Directors Rates of subscriptons |
Section A - for Funeral Directors' Vehicle owners.
Scales for subscriptions for Funeral Directors (inc branches).
|
1982 |
1983 |
1984 |
1985 |
1986 |
|||
|
Grade I |
- |
Carrying out up to 50 funerals per year |
£19.00 |
£26.00 |
£28.50 |
£36.50 |
£38.50 |
|
Grade II |
- |
Carrying out from 51-100 funerals per year |
£39.00 |
£39.00 |
£43.00 |
£55.00 |
£58.00 |
|
Grade III |
- |
Carrying out from 101-250 funerals per year |
£37.00 |
£52.00 |
£57.50 |
£73.50 |
£77.50 |
|
Grade IV |
- |
Carrying out from 251-500 funerals per year |
£47.00 |
£68.00 |
£75.00 |
£96.00 |
£101.00 |
|
Grade V |
- |
Carrying out from 501-1000 funerals per year |
£56.00 |
£80.00 |
£88.00 |
£112.00 |
£118.00 |
|
Grade VI |
- |
Carrying out from 1001-1500 funerals per year |
£75.50 |
£105.00 |
£115.00 |
£147.00 |
£154.50 |
|
Grade VII |
- |
Carrying out from 1501-2000 funerals per year |
£93.50 |
£128.00 |
£140.00 |
£179.00 |
£188.50 |
|
Grade VIII |
- |
Carrying out from 2001-3000 funerals per year |
£141.50 |
£186.00 |
£205.00 |
£261.00 |
£274.50 |
|
Grade IX |
- |
Carrying out from 3000+ funerals per year |
£187.00 |
£246.00 |
£270.00 |
£344.00 |
£361.00 |
Section B - For vehicle owners only
|
With 1 hearse |
£19.00 |
£26.00 |
£28.50 |
£36.50 |
£38.50 |
|
More than 1 hearse |
£29.00 |
£39.00 |
£43.00 |
£55.00 |
£58.00 |
Section C - Miscellaneous
|
Additional full membership |
£19.00 |
||||
|
Association members - Class A each |
£9.00 |
||||
|
Association members - Class B each |
£23.00 |
£25.50 |
£28.00 |
£36.00 |
£38.00 |
|
Association members - Class C each |
£19.00 |
||||
|
Licentiate members each |
£9.00 |
Produced by the Inland Revenue
October 1990
© Crown Copyright 1990
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