COMPETITION for the young pound is hotting up despite the disappointingly slow start to the government’s child trust fund (CTF) scheme.

Bradford & Bingley last week challenged the market with two new savings accounts aimed at children and young people; the Association of Investment Trust Companies is targeting parents with “Investing for Children” fact sheets; and Halifax has a tempting 10% headline rate on one of its accounts.

Other firms are also planning to launch schemes aimed at children in the coming weeks.

Children qualify for CTF vouchers if they were born after August 31, 2002. Fans of the scheme argue that the vouchers are at least encouraging parents to save more for their children, even though the government admits more than half the 1.92m qualifying families have yet to invest them.

Research from The Children’s Mutual, a friendly society, reveals that the number of parents setting up savings accounts for their children has jumped by more than 50% since the introduction of the initiative last spring.

David White, chief executive of The Children’s Mutual, said: “It is very encouraging to see so many parents saving more for their children, despite the large number who are yet to invest their CTF vouchers.

“We get a lot of calls from parents who want to invest in something similar to a CTF for older children who do not qualify because they were born before September 1, 2002. We are therefore planning to launch a CTF-like plan to meet this demand.”

Postgraduate student Sharon Burch, from Rye in East Sussex, is one of the millions of parents with children who do not qualify for CTFs. She has chosen to invest in Youngster Bonds and University Bonds through The Children’s Mutual for her sons, Josh, 11, and Oliver, 9.

Burch, 35, said: “I started saving for both Josh and Oliver when they were born and have gradually increased the amount I pay in each month. I want to be able to give them something to put towards the cost of university, driving lessons or buying a car, when the time comes.”

She is shocked that so many parents are delaying investing their CTF vouchers. “I don’t know that much about the CTF scheme because neither of my boys qualifies for it. However, it seems silly not to take advantage of free money from the government,” she said.

Sainsbury’s Bank estimates that more than £60m of CTF vouchers have been lost or misplaced by parents.

But White believes that the biggest obstacle for many parents is a lack of understanding about the different types of CTF available.

There are basically three options into which parents, relatives and friends of the child can pay in up to £1,200 a year — deposit accounts, “stakeholder” equity plans and “non-stakeholder” equity plans.