From the start of September, every child in Britain reaching their seventh birthday can look forward to a second £250 voucher as a Government gift towards a lump sum for when they reach adulthood.

Gordon Brown, when he was Chancellor of the Exchequer, unveiled the Child Trust Fund (CTF) as a new 'Savings Gateway' for all children born on or after September 1, 2002.

If everybody has a CTF, then nobody needs to start their adult lives with nothing at all. Already, 4.4 million CTF accounts hold more than £2bn.

Every qualifying child got a £250 Government voucher at birth, with a second voucher at seven also going into the lump sum accessible only on their 18th birthday. Invested either in a savings account or in shares through managed funds, the money grows free of tax.

But as CTFs enter a new phase, financial data website Moneyfacts.co.uk has been analysing how they have fared so far. It is grim reading for little Johnnies and Joannas dreaming of splashing the cash at 18.

So far as cash accounts are concerned, Moneyfacts says £250 invested with Hanley Economic Building Society — consistently among the most generous and currently paying five per cent on CTF accounts — has grown in four years to just over £327.

Of course, there are years to go before the first CTFs mature in 2020, and we have lived through dramatic bank collapses which will probably never be repeated in our lifetimes.

Equity investment, we are always assured, is essentially for the long-term.

Yet unless CTFs are topped up on a fairly regular basis, it seems at this point that they might struggle to have much impact on the lives of most 18-year-olds.

When they began, the movement of share prices in the previous 18 years suggested that CTFs topped up by the annual maximum (£1,200) each year could exceed £30,000 at 18. That really would be lifetransforming, in paying for a degree course or perhaps a deposit for a first home.

But plenty of financial institutions were wary from the beginning.

Fund managers have tended to steer clear, while bigger building societies and banks have tended to ignore CTFs altogether.

Perhaps they were right. Figures suggest that 75 per cent of CTFs opened so far— some of them by the Inland Revenue if parents failed to act within a specified period — include only an original voucher.

Yet if our society is ever to regain the thriftier attitudes of yesteryear, which is apparently necessary to get through the credit crunch, the change has probably got to start with young people.

That is why David White, chief executive of The Children's Mutual, a long-established friendly society which he reshaped to pioneer CTFs, is so strongly committed to the concept.

“Our research shows that, despite recession, people still feel thatsaving for their children to give them the best future they can is veryimportant,” he said.

Of 700,000 CTFs with The Children's Mutual, around half haven't been topped up at all. Of the rest, the average additional saving is £24 per month— likely, on current trends, to produce a lump sum of £9,750 at age 18.

"We have also seen a wider benefits, Mr White added. “Since the recession started, parents have talked about money to children more than ever before. We could have a generation of 18-year-olds, in 11 years' time, aware of the benefits of saving much earlier in their lives."

The Children's Mutual acknowledges that CTF gains so far are marginal: it thinks the total sum at age 18 from two Government vouchers worth £500 could be £862 in a savings account, and £1,185 in a sharebased account. Set this against the average graduate debt running at £20,000 today, and it becomes obvious that a CTF only assumes real significance with the boost of regular top-ups.

Kevin Mountford at www.Moneysupermarket.com believes that people should take advantage of this "free money".

"Savings rates on CTFs, which tend to be offered by the regional building societies keen to attract younger customers, can be a big improvement on Bank base rate at 0.5 per cent," he said.

“We need to create a culture in which people start to save again for things, where parents and grandparents give one present at Christmas and put the rest in cash for a savings account.

"Over the long-term, we know equities tend to outperform cash. If shares manage a gradual recovery over the next decade, it won't take many sacrifices from families to build a lump sum worth £5,000 at age 18."

Alongside the CTF, parents and grandparents might want to build a savings plan linked to shares which children can access before they are 18.

Several investment trusts have plans in place, including Scottish Investment Trust (SIT) which launched Stockplan: A Flying Start in 2004 to invest in global markets, with low charges.

Minimum monthly payments of £25 can be stopped and restarted at any time, and occasional lump sums (minimum £250) also invested. Withdrawals, at any time, cost £10 plus VAT.

Although SIT suffered a 22.7% drop in asset value last year, Stockplan is geared, like CTFs, to produce a lump sum which can be used towards the costs of getting a degree, or even to fund a gap year.