It believes long-term measures are vital to enable individuals to make informed choices about pensions, debt and investments. “The research we did shows quite astonishing levels of ignorance and misconceptions,” said Anthony Carlisle, a member of the Committee on Private Share Ownership. “It is Micawberish at one level, but basic ease of understanding about lending and good financial management and investment is important.”

The report argues that private investment in the stock market is one way individuals can prepare for the projected erosion of the welfare state in areas such as pensions and healthcare. Its authors, comprising City financiers and other experts, have urged the Stock Exchange to press for the inclusion of personal finance in the national curriculum.

“The number of people with a stake in the stock market has more than trebled in the last 10 years, so that one in four adults now owns shares or unit trusts,” said committee chairman Sir Mark Weinberg, chairman of J Rothschild Assurance.

“However, despite the significantly higher returns shown by these investments over the long term, nearly two thirds of wealth is still held in cash. If people are to take over responsibility from the state for providing for their own retirement needs and long-term care, as the political consensus now requires, we have to increase the number of investors.”

The committee found the main obstacle to private share investment was ignorance about likely benefits and how to mitigate inherent risks. While 62 per cent of the population saved, only 26 per cent owned shares or unit trusts. Such investments have in the past performed much better than building society deposits.

ProShare, a non-profit organisation funded by over 100 companies, has been promoting better personal financial management since 1992 and has distributed 1,500 copies of a teaching manual for schools and colleges called Your Money: Be Wise.

Mr Carlisle, executive chairman of a financial marketing firm, believes much more needs to be done. ProShare, which was represented on the Stock Market committee, could be a model for some of the work.

While ProShare is hampered by lack of resources, financial institutions could be encouraged to sponsor teaching materials and programmes, reducing the cost to government, he argues. “There is not a great level of understanding among teachers about the importance of these areas.”

He favours exploiting the large number of people who have left major financial institutions through early retirement or redundancy and who could offer their expertise to schools.

Other proposals to extend share-ownership include promotion of the Stock Market, clearer company information, and simplification of the tax system as regards investments.