The Treasury has announced the introduction of its Financial Capability Action Plan to help people who are struggling with debt.

Offering free advice and assistance to those with money problems, the package has been launched to move the government and Financial Services Authority (FSA) closer to meeting their goal of making UK consumers better informed and more confident with cash. Principal among the new support offerings are an extension of the services provided by the FSA’s Moneymadeclear website, which will be publicised on a wide scale in the autumn. The site will aim to provide information and support for matters such as credit cards, personal loans, mortgages and utilities expenditure.

There will also be a new 12 million pound programme to improve free money advisory services available in the north-west and north-east of England, which will aim to provide support for hundreds of thousands of people in these areas who are struggling with debt management and budgeting. This cashflow injection comes following recommendations set out in the Thoresen Review into the provision of generic financial advisory services. It is expected to be brought into operation next year.

For those who have found themselves struggling with debt in recent months as living costs increase, taking out a debt consolidation loan may prove an effective way to put an end to spiralling financial expenditure.

In an effort to prevent people from entering into a situation of financial instability at an early age, the Treasury also announced the introduction of a new 11.5 million pound education programme to advise young people between the ages of four and nineteen on the dangers of entering into debt.

Commenting on the new programme, chief secretary to the Treasury Yvette Cooper, said: “Many families are feeling the pinch as a result of high fuel and food prices and the impact of the credit crunch on mortgage lending. But when people are facing money worries they often don’t know where to turn. We need to make it much easier for people to get access to information, help and advice. The government is also determined to do more to create an environment where people get personal finance education and information from the start of their lives to the end; helping them with money problems and supporting them at key points in their lives.”

Meanwhile, Hector Sants, chief executive of the FSA, said the project would help to educate and empower consumers, enabling them to make the right choices when it comes to financial planning and regain their confidence in their economic stability in the long term. In total, the government commits more than 200 million pounds to tackling consumer debt in the UK providing assistance and advisory services.

For consumers who have found themselves struggling in the face of inflation and the credit crunch, taking out a consolidation loan may prove an effective way to get back on their feet financially. Taking out this type of loan may be useful who feel their debt level is having an adverse affect on their mental wellbeing. In recent weeks the Finance & Leasing Association has said that it will provide financial backing to a new study aiming to measure the impact that debt has on mental health.

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