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Britain must become a nation of money-saving squirrels if it is to crack the nut of university funding, according to the right-wing thinkers of the Social Market Foundation.

In a report, Memo to Modernisers, SMF's research officer Katherine Raymond calls for "a cultural shift towards personal investment in ÖйúAƬ" which would make everyone familiar with the language of Tessas and unit trusts.

Ms Raymond recommends that "parents and individuals should be encouraged by government to plan and save for their children's or their own education". One way is to widen access to the popular tax exempt special savings accounts - known as Tessas - which are currently used by four million people. With an initial deposit of Pounds 100, topped up by a monthly payment of Pounds 10, investors can save around Pounds 9,000 over five years. The SMF suggests that the Government's contribution to the plan be based on the amount of interest accrued.

Another education-friendly private investment scheme is the unit trust. Ms Raymond points out that investing through the stock market is "highly tax-efficient". She acknowledged that a trust usually entails some start-up costs, but suggested that high-street banks could be persuaded to establish special schemes, just as the Midland Bank offers free documentation and payment of stamp duty for a unit trust scheme designed for children.

Ms Raymond said: "A proactive savings culture will not only give families and individuals a positive and personal stake in ÖйúAƬ, but will also encourage people to view the state not as a provider but as a facilitator and supporter."