Simon Read: Extra funds totalling £40.5m will help a lot of people. Or will it?

The Money Advice Service has been handed £40.5m to help people with debt problems. That's great news. It's a lot of money that could go a long way towards helping vulnerable people with their money worries. I'm pleased the Government is waking up to the growing problem of debt.

OK, so it's not extra money or new funding. The Government has simply passed responsibility for "delivering debt advice across the UK" to the Money Advice Service, which is presently part of the Financial Services Authority. The City watchdog has asked for the cash in its fees and levies consultation paper published on Thursday.

But once the Money Advice Services gets the cash, what will it do with it? With an estimated four million people currently in fuel poverty – when a tenth of their income is taken up paying gas and electricity bills – maybe the service could help them.

Its budget works out, neatly, at a tenner for each person in fuel poverty. But, let's face it, that's not really enough cash to make enough difference. Would £100 help with fuel costs? Probably. So maybe the cash could be given to one in 10 struggling people.

But hang on. If someone's in fuel poverty it's very likely they're struggling with all their finances. In which case, £100 may make no real dent in their debt woes. They need more. So maybe the cash could be handed out on a basis of £1,000 per deserving person. That's a grand idea which would help 40,000 folk.

But then what about the remaining millions of people with debt worries? Surely we can't have what would amount to a lottery to decide who to help? Well, no, of course not. In fact, the Money Advice Service's £40.5m debt fund has already been allocated.

Part of it will be used to "ensure continuation of existing 16 face-to-face debt advice providers". Only 16? There's more. The cash will be used to introduce "efficiencies and improvements" which, the service claims, will lead to a 50 per cent increase in the number of people using the face-to-face services.

That sounds better. So how many people will these 16 debt advisers be able to see through the planned efficiencies and improvements? Around 150,000, according to the MAS. In other words, the 16 debt advisers will be expected to help 9,375 folk each in 12 months.

To reach that target, each adviser needs to see 180 people a week or 36 a day. Assuming the debt advisers work an eight hour day and only take 12 minutes for lunch, they could give each person a maximum of 12 minutes, allowing a minute between clients. Is that enough to listen to their financial problems, identify what the problems may be and then come up with some workable solutions? The financial authorities seem to think so.

And the Financial Services Authority has a great track record when it comes to it, doesn't it? You just have to remember its leading role in the global financial crisis.

So the £40.5m will ensure 150,000 people get access to some debt advice. What about the millions more who are in financial trouble? Never fear, the Money Advice Service has thought of that and plans to use some of the money to "develop a new, more sustainable and efficient way of funding and delivering debt advice".

Brilliant. Maybe they'll discover a way for the 16 debt advisers to cram face-to-face meetings with even more vulnerable people. Perhaps they could see two at a time – that would double the amount of people getting free debt advice to 300,000. Or what about six people at once? Do that and the debt service will soon be able to claim to be helping almost a million people a year.

I don't really want to criticise anything that could help alleviate people's debt woes, but I reckon there needs to be much more government support towards providing real help to struggling families. Educating people about money – which is essentially the Money Advice's role – is part of it, but cracking down on companies that encourage people to get into debt or prey on the hard-up is more crucial.

You could start by outlawing the actions of lenders which encourage people to take on more debt, rather than help them deal with their existing problems. You could then make banks and other financial institutions earn their money from serving people rather just flogging them products.

You could ban all advertising from bookies and casinos which tempt people to try for easy money. You could outlaw unfair contracts from the likes of gyms and phone firms, which can leave people stuck on unaffordable terms.

In other words, rather than just relying on people to educate themselves about money matters, it's also essential to force firms to treat people fairly.

s.read@independent.co.uk