Chancellor Rishi Sunak should spend £15 billion investing directly into British businesses in exchange for shares that would one day be sold to the public, a new report has suggested.

The Social Market Foundation (SMF) report by Conservative MP Bim Afolami said the Treasury should focus on making investments into small and medium-sized enterprises (SMEs) to help them recover after the coronavirus crisis.

Ministers have previously offered start-up loans to businesses and offered investment, but not on the scale being proposed by the think-tank and Mr Afolami’s Recovery Fund, which would be floated on the London Stock Exchange.

The report, titled Unlocking Britain, also proposes offering discounted shares to lower-paid NHS workers and younger people, which could encourage saving.

Mr Afolami, a member of the SMF’s cross-party advisory board and private parliamentary secretary to Work and Pensions Secretary Therese Coffey, is expected to raise the idea in Parliament on Wednesday.

The proposal is one of 10 suggestions, which also include abolishing district councils and pressing private schools to make online learning available to state school children.

The report also says that ISA savers should be able to invest directly in British companies, potentially putting up to £6 billion a year into businesses in need of support.

Mr Afolami said the £15 billion could be borrowed and invested via the Government’s British Business Bank, with the bank using commercial fund managers to avoid any potential for political interference.

He added: “We should use the financial power of the state to provide short-term support for small and medium-sized British companies, then in the long term to widen ownership of British business and give more people a stake in the economy. This plan would deliver a strong recovery and a fair economy.”

James Kirkup, SMF director, said: “We will need new economic thinking to get us out of the coronavirus recession, and the idea of governments investing in companies to support the recovery should be studied carefully.

“A sensible economic partnership between the state and the private sector is something people of all parties should embrace. So, too, is a stakeholder economy where ownership is spread more widely.”

Prime Minister Boris Johnson has already indicated that the Government would set out a plan to rescue the economy from the coronavirus crisis before the summer, with suggestions it would be before the July 21 Summer recess.

The Office for Budget Responsibility (OBR) has forecast that interventions, including the furlough scheme and tax breaks for commercial properties, will cost the Treasury £132.5 billion.

Borrowing could hit £298.4 billion this year as a result of the coronavirus crisis, the OBR said last month, and Mr Sunak has hinted at tax increases to “right the ship”.