Is the 7% increase in crematorium charges even legal?

Isle of Wight Council officers have again defended the decision to increase crematorium charges by an inflation-busting seven per cent, taking most cremation fees over £1,000 for the first time. That is despite a report by the Competition and Markets Authority (CMA), backed up by the Local Government Association (LGA), claiming local authorities are only allowed to charge on a ‘cost recovery basis’, which would make the high charges for using the Island’s crematorium illegal.

Council accounts reveal that the council has made a profit of almost £1½ million from bereavement services over the past five years. The latest fee increase is estimated to ramp up profits to rake in more than £½ million over the next 12 months. It is a remarkable approach from a local authority in a monopoly position during a deadly pandemic. Rising funeral costs always hit the poorest hardest. In 2019 the average debt taken on by those who struggled to pay for a funeral was £1,990. That figure has increased by 53% since 2013.
A major investigation into the funeral market by the CMA, published last December, says that councils are not allowed to make a profit from their bereavement services, including cremations, unless they set them up as a separate company. A number of local authorities have done just that, the first one being Gateshead Council, who, in June 2018, set up a separate trading entity ‘to offer a quality bespoke funeral service at an affordable and competitive price’.

The final 500-page report from the CMA does not make happy reading for local authorities. It estimates that, nationally, they overcharge people up to £170 per cremation on average. That could be considered bad enough, but buried away in Appendix B, the CMA sets out the legal position on the charges levied by local authorities. It says that because they are ‘discretionary services’, charges must be set in accordance with the Local Government Act of 2003, which says councils cannot make a profit.
This tallies with information supplied by the LGA, who represent 335 of the 339 councils in England. They confirmed to the IW Observer this week that the information they supplied to the CMA remains valid.

Isle of Wight council officers maintain they are in the right, a spokesman told us this week: “The Isle of Wight Council does not seek to rely upon the powers contained in the Local Government Act 2003 in order to charge for its bereavement services. Such powers exist by virtue of the Local Authorities Cemeteries Order 1977, the Cremation Act 1902, and the Local Government Act 1972 and it is under, and in accordance with, these provisions that the council’s fees are set.”

However, officers may struggle to persuade the councillor responsible that all is well. Cabinet member Gary Peace oversees bereavement services. In an intriguing coincidence he has worked for the CMA and instead of dismissing the issues he thanked the IW Observer for bringing them to his attention. He said: “I am a strong supporter of the CMA and their work, and have first-hand knowledge of their expertise and thoroughness, having established their digital forensics capability as the CMA’s Head of Digital Investigation and Intelligence Laboratories.”
Confirming that nothing could be done immediately because of rules about political activity before an election, he added: “If I’m re-elected and remain in this post, I give a personal commitment that a planned review of our service and the condition of the crematorium will now include a full review of the charges we make and the legislation under which they are levied. “