The British government at the beginning of this year officially launched its Child Trust Fund (CTF) initiative in an effort to encourage parents and children to develop the savings habit and to teach children the value of saving their own money.

Chancellor, Gordon Brown said, "The Child Trust Fund is designed to ensure that every child in our country has assets and wealth and that no child is left out and all children in Britain have a stake in the wealth of the nation".

The basis of the CTF scheme is that every child born in the UK on or after 1 September 2002, will receive an initial Government payment of 250-500 (depending on family income), which must be placed into a tax-free CTF savings account which cannot be accessed for withdrawals until the child reaches 18 years of age. Additional contributions to the account can be made by the childs family or friends, and the government also plans to make another payment to children on their seventh birthday. Parents that do not invest the government's gift within a year will have it invested for them by the Inland Revenue.

This free money for children idea seems on the face of it to be a great idea for parents. A recent survey by the Halifax has shown that, of those parents who have already opened a CTF account, six out of 10 planned to make further contributions, and wanted their children to use the cash from a matured CTF to pay towards a university course. The survey also showed that 28% of parents hoped the cash could be used to buy a car, while 19% hoped the money could be put towards a deposit for a flat or house.

Although some families have taken to the idea by quickly investing the funds to maximise the cash return for their child when they reach 18, with figures from HM Revenue and Customs recently showing that nearly half a million CTFs had been opened, others have been more reticent, with approximately 1.2 million CTF vouchers sent out to parents still not invested.

A study by Abbey found that of those who had so far not invested their CTF voucher, nearly two-thirds stated that they, "just hadn't got round to it yet", while about one-quarter had not invested the money because they did not know which supplier to choose.

Another problem that has been recently highlighted is the lack of provision that has been made for Islamic children, as none of the existing CTF accounts complied with Sharia law. Under Sharia law, it is forbidden to give or receive interest or to invest in unethical firms. This meant that, in order to use the voucher, parents of the 120,000 eligible Muslim babies could only choose non-Sharia compliant accounts. Thankfully, in a move welcomed by the government, the first Sharia compliant CTF has just been launched by Children's Mutual, allowing a growing community of people who were previously reluctant to invest their CTF, the opportunity to benefit from CTFs.

The take-up of the CTF has proved to be extremely disappointing for the Government, with those who have not so far invested their voucher being at risk missing out on valuable growth to their fund. Ray Milne, managing director of Halifax Financial Services, said that "Most parents probably still have opening a Child Trust Fund on their 'to do' list, but we're urging them to act now and ensure their children benefit from their investment".

Whilst many view the whole idea of the CTFs as a waste of tax-payers money given the ensuing pensions problem that is looming, others see that any benefit to future university students would be overshadowed by the rising cost of university tuition fees.

"For those who choose to go to university it is a particularly hollow gesture as the government will give them a few hundred pounds in cash and at the same time a mortgage-style bill in tuition fees," stated Phil Willis, the Liberal Democrat education spokesman.

Whatever your opinion of the scheme itself, it seems that even the majority of those whose children will benefit from the fund are either not interested or feel they do not have enough knowledge to choose a provider. While the government can produce expensive adverts to raise pubic awareness and companies can provide information on the accounts that are available, the publics fear and apathy regarding all things related to personal finance may prove a more difficult hurdle to overcome, and this may be a problem that not only affect us, but will also lead to many of our children paying the penalty in later life.