Public Private Partnership in the Funeral world – An Oxymoron?
Why do so many crematoria look so down at heal? In many local authorities there has been a complete lack of investment in their crematoria. As a consequence some families are not getting quality or good value funerals plus there is higher air pollution with increased mercury and carbon dioxide emissions. .
I was brought up in a little village in the ‘Rose of the Shires’ (Northamptonshire) which was within walking distance of the county crematorium. It was a classic design, that civic red brick style common to many crematoria as they were built in the mid twentieth century. It was run by a man who supplemented his income by renting out dodgy VHS videos (no I’m not joking)! Whilst, thankfully, things have moved on in this respect, but the state of the building hasn’t.
It was brought to mind recently when an old school friends’ parents passed away within days of one another. The family choose to have the cremation over 30 miles away in Rugby due to the simple fact that they thought their local crematorium was dire.
The route of the problem
The fact of the matter is that there has been little to no investment, although this is not particular surprising. The councillors are caught in a perpetual conundrum. You can imagine the budget meeting: “So Ladies and Gentlemen, should we spend a million pounds on refurbishing the crematoria, or should we spend it on funding gaps in child welfare services?’, ‘Can the crem hold on for another year?’, ‘Yes, just about’, ‘Well then…’, the decision is always going to be the same, as a consequence crematoria gets no investment year after year.
And yet the next Council meeting. You can also imagine, with expenditure on the increase, Counsellors will say: ‘Where else can we generate income from?’ and one bright spark will reply: “Well I’ve compared the local crematoria and they’ll charge about x pounds more than us for a single cremation, we should up our prices.”
If you add to this the findings from the Scattering Ashes report: What The Public Think Of Crematoria Part II and the Dignity report: Cost, quality, seclusion and time – What do UK customers want from a cremation funeral? and the findings from The Competition and Markets Authority (CMA) report on Funerals and you will see that people will stick with a certain crematorium: as people in the family have been cremated there (and this then gives continuity) and people on the whole do not wish to travel distances for a funeral, especially if there are other constraints such as the wake.
A couple of years back I was chatting with an old friend of mine who works in property development and gets investment from everywhere. And I said: ‘Oh, what is the new hot investment areas at the moment?’, He replied: ‘We are looking to invest in student accommodation. Oh yes and crematoria. Do you know where I can invest in any crematoria?’
Now some might say why don’t Local Authorities simply divest this part of their portfolio? They would make a decent amount of money. However, it is a bit like the proposed selling of Wembley by the FA, yes it would give them a large cash injection, but like all family silver you can only sell it once and no matter how many million you raise from the sale this will only represent a relatively small amount in the Local Authorities annual budget.
The second reason many councils don’t or won’t divest is they fundamentally believe it should be a service that the council provides for its residents, the thinking is rough: it’s a public service and therefore if we hand it over to the private sector then we have no control over the service or the cost.
Therefore, Local Authorities get caught in a stasis, knowing they need to invest but unable to, but it seems to me this is quite an old fashioned way of thinking, why should the debate should be so polar: retain or sell.
The other issue that will impact the picture is Direct Cremation. Principally due to the use of the asset. Historical sites would have 2 cremators which would operate 7-8 hours per day 5 days per week, manned in extended office time. The rise of direct cremation means assets are being used for longer, with bodies from a wide range of locations being shipped in. This paradigm shift which is happening right now means that more bodies are being cremated for less money and this is a saving that is/can be passed onto the customer.
However, there is a likelihood that current crematoria are not ideally suited to this for a number of reasons:
- Traffic flow of bodies brought into the crematoria for a non-time allotted slot
- Staff contracts: this new practise will mean more antisocial hours as more hours in the day are required operate this system
- The number of cremators on a site, it makes sense to have a great number of cremators.
I suppose it’s like the old adage ‘if I was going to set this up, I wouldn’t start from here’. Trying to fit new model onto an old system when it just needs rethinking from the start. In much the same way as the traditional banks have struggled with online banking whereas new disruptor banking apps are slick from the start.
So, it begs the question: do we need any more crematoria locations or should we make those we have more efficient? Certainly, if I was a member of the planning inspectorate or a disgruntled local opposition group I would argue the latter, but obviously this is not a one-size-fits-all statement and thought should be given on a case by case basis.
However, whilst there are notable exceptions there is an argument that we already have enough locations. If we put the wants and needs of those that need investment against those that have the ability to invest, we can see it is a bit like continents of Africa and South America: they fit (almost).
Let’s consider the pros and cons of a public private partnership to redevelop existing crematoria:
Local Authorities, Pros:
- Potentially better service for their residents, a more modern facility that can adapt to a modern ceremony- comfort, lighting, etc.
- Reduced air pollution – particularly from mercury.
- A potentially stronger and more robust income stream for the authority.
- Better public perception of the authority.
- More flexibility to offer the new range of funeral approaches.
- Carbon reduction from more efficient cremators.
Local Authority, Cons:
- Handing over some control and some income
- A potential break in service provision to local residents.
- Entering a business which already has a customer base.
- No need to find a suitable site.
- Significant reduction in development time principally from planning and site selection.
- Increased business opportunities.
- Potential reduction in operational flexibility.
- No overall ownership of asset.
Is there an answer?
You could argue that the Local Authority could simply go out to market and raise funds from private equity or a financial institution and for some this might well be the answer, however I think doing this they might fail their citizens for a few reasons:
- Skills gaps for the project management in this arena.
- Potential loss of access to the direct cremation market – most local authorities wont operate in this market place
Time to dispel a myth at this point, in all my years working in the public sector there was a fear of the private sector as if a) making money was bad and b) they had a team of sharp suited lawyers in the background ready to make mincemeat of you as soon as you had signed on the dotted line. Now in my work in the Private Sector you get the cliché that local authority people are not looking for extra work and lack business acumen. We need move on from this stalemate otherwise we will continue to make bad business decisions based ignorance and stereotypes.
If the above assumptions are correct then one wonders is there a role for some sort of Private Finance Initiative (PFI)? The old PFI is so prevalent in the Blair era and got a bad reputation. But the concept wasn’t wrong in itself, just the way it was implemented. Often the partnership wasn’t really a partnership. The legal framework was so rigid – there was no flexibility to manage the externalities, and often companies made too much or too little money. Without the building of trust it turned into more of an adversarial situation. However maybe …. maybe there could be a way, but that would take a leap of faith…