Question: April 6 marks the first anniversary of the child trust fund - would you say that it has been a successful first year?

Robin Bailey: In some respects it has been successful because many parents, probably 60 to 70 per cent, have taken advantage of the offer and have benefited their children as a result

There is still however a considerable number that haven’t done anything with it and of course had they invested on day one in the stock market they would have experienced growth of 20 per cent this year and even on the cash funds there has been a years worth of interest wasted.

I think there’s a lot more to do in terms of making a compelling product for parents to use.

From Nationwide’s perspective it’s been very successful we have an 18 per cent share of the market and we are one of only four national high street organisations that offer both a cash and equity child trust fund so it’s worked well for us.

Question: You mention that only 60 to 70 per cent of parents that have taken up the offer, do you find that figure slightly disappointing?

Robin Bailey: Yes, the reasons for it are a bit hard to find. Why wouldn’t parents take advantage of a free gift of money for your children?

The view that comes back from parents is quite varied; that they have lost or mislaid them or are unaware that they will be automatically allocated or even that parents do not have the time to make the choice to invest the voucher.

I think personally one of the big issues is that there are so few high street organisations offering a cash alternative for the vouchers.

Despite the intellectual argument for investing them in shares over a long period of time many people are frightened by that perspective and feel more secure investing in cash.

We are one of the few that offer a cash option and we found that 60 per cent of parents have invested in that medium so it suggests to me that if more of the high street providers had got behind a cash alternative we may well have seen a greater take out across the board.

Question: Do you think that there is more of a role for government in marketing cash alternative child trust funds to the public?

Robin Bailey: Yes I think there is.

The government need to be more direct but of course they are slightly dependent on the providers helping them.

If the high street providers are not offering a cash product then it’s unlikely to be advertised in their windows which loses some of the impetus behind the governments push.

Question: Why do you feel it’s important for parents to take out the child trust fund?

Robin Bailey: This is a fantastic opportunity for parents to enable their children to have a significant cash sum available when they reach the age of 18.

If the parents delay it will mean they miss out on the kind of growth we have talked about - 20 per cent gross in the equity product.

Another benefit of the funds are that they give grandparents, etc, an account to add to their grandchildren’s savings in a very cost effective way.

They can make contributions in total including the voucher of up to £1,200 a year so there is a great opportunity to make the funds a family affair in supporting the future of the child.

Question: Will parents have any control over how the child chooses to spend their money when they reach their 18th birthday?

Robin Bailey: No, when they turn 18 the complete ownership of the money passes to the child.

Some parents have expressed a concern about not having any control over the final sum.

We conducted a study last year which revealed that the larger the sum of money received by children at the age of 18, the more likely they are to spend it responsibly.

For example, if we are talking about a few thousand pounds plus, our research has suggested 17 to 21-year-olds would use that money in a very meaningful way; to fund educational needs or to put a deposit on a house.

If the amount they were going to receive was less, around £1,000 say, then they would be more likely to spend it on holiday, entertainment or shopping.

This lends further emphasis to the need for parents and grandparents to think about giving and creating a more meaningful pot for their grandchildren or children to inherit when they are 18.

Question: We have already discussed that cash accounts seem to be a lot more popular than equity accounts. Do you think there’s a need for education to bridge the fear for parents in investing in non-cash accounts?

Robin Bailey: Absolutely, and that’s where it comes back to this issue on the high street, because with Nationwide if someone comes in to us and says, "I’d like to use my voucher for the child trust fund should I have equity or cash" we’ve got specialists in branch who will sit down and talk to them about the most appropriate product.

If parents go into other organisations where they only carry equity funds it becomes more difficult.

I do think there is a very compelling argument for equity funds over 18 years, but it comes down to how people feel in themselves, how comfortable they feel with that investment and if they don’t have access to good quality advice they are likely to shy away from it.

Question: What did you make of the announcement that Gordon Brown made in this year's Budget on child trust funds?

Robin Bailey: We were really pleased that he has committed to top up the fund at the age of seven but we believe there should be another top up at the age of 11 and we will continue to pressure for that.

Question: What do you think about older children that are outside the child trust fund at the moment?

Robin Bailey: Interestingly what we have seen is that a lot of people who have come in to invest the vouchers for their children who are eligible have started accounts for their other children at the same time.

In other words they said well its great that my son has this kick start for life but I want to make sure that my older children who are out of the scheme are not disadvantaged.

So we will open a similar account, obviously they don’t have a free voucher, but there are accounts within Nationwide, for instance our Smart Account, which are very attractive accounts for children and gives them the opportunity to set off on the same path of creating a worth while pot of money for that child when they’re 18.

We know that more than 10 million children in the UK are under 18 but are too old for Child Trust Fund. We also know that these children do not have the same tax-free allowances that are available to children eligible for the Child Trust Fund.

We would like to see equal tax treatment for all children and have recently published a children's savings report which calls on the government to remove any tax distortions associated with children's savings.

Question: Do you think that top-ups at age seven will help to bridge that gap of 30 to 40 per cent of people who haven’t taken up the vouchers?

Robin Bailey: While the extra top-ups in themselves may not make a huge difference, we know from our own branches that every time the government talks about Child Trust Fund or makes any new announcement, we see an increase in the number of accounts opened as parents are reminded to cash their child’s voucher.

Question: How do you see the child trust fund developing, and what action would you like to see from the government on child trust funds in the future?

Robin Bailey: I think the removal of tax distortions in saving would help because they discourage parents from saving for their children. Some accounts are taxed and some aren’t, I think that’s a confusion.

In terms of contributions to the child trust fund, it would be helpful if they were index linked because there is obviously a time factor impacting on their real value.

We talked about extra top ups at perhaps 11 and 13 and possibly even linked to achievement of financial education goals so that there is a spur to educate children to plan their finances wisely.

If the purpose of this account is to give children a real kick start to life, then I think the government needs to be much more transparent and open about what the objective is.

Otherwise it just becomes a savings vehicle without a real objective behind it and I think the government could really put a lot of meaning behind it and give people attainable goals as a result of that.