The government is being urged to use the sale of its Royal Mail and Lloyds Banking Group shares to reach out to small investors and engage more people with share ownership.

Chancellor George Osborne announced on Thursday that he planned to sell off the government's remaining £1.5billion stake in Royal Mail this year but said nothing about whether any shares would be offered to the public. Three days earlier he had confirmed that part of the £12bn taxpayer stake in Lloyds would be offered to retail investors, with a campaign akin to the 'Tell Sid' sell-off of British Gas 30 years ago.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "The flotation of Royal Mail in 2013 really captured the public imagination, and prompted many people to invest for the first time. The float was so popular, share applications were dramatically scaled back, so we would urge the government to remember to tell Sid this time around too, rather than allocating shares to institutions only."

Mr Osborne last week announced the creation of a new company UK Government Investments to oversee a £23bn sell-off including government stakes in Eurostar, UK Asset Resolution, and parts of the pre-2012 student loan book.

The Wealth Management Association, representing 190 firms which serve over four million private investors and manage £510bn, said the Lloyds sale could pave the way for a "cultural shift in the UK towards more and more retail investors engaging in managing their wealth".

Liz Field, chief executive, said: "We believe there is more that could be done in promoting this long term investment by individuals, such as ensuring more IPOs and corporate bond issues are open to retail investors, as this will create more accountable organisations due to the widest possible range of shareholders and bondholders. This is turn creates economic growth for the UK and further wealth for individuals."

She went on: "Giving priority to institutions or sovereign wealth funds ignores those who have a vital stake in these companies in the first place. The government has a duty to ensure ordinary retail investors have an opportunity to own shares in such companies. Individual shareholders are typically investors, not speculators - they look to the long term and many take an active interest in the performance of the companies they own."

Andy Thompson, the WMA's director of operations, said the Royal Mail sell-off had revealed that some supposedly long-term institutions were prepared to sell for a quick profit. "The average retail investor holds for six to eight years, they are not quick buck investors."

He said it was disappointing that new issues such as Virgin Money had been limited to institutions, with the excuse that a public offer would not be cost-effective. "We are now in the internet age where our members be they investment managers or stockbrokers effectively pull together their client requirements in a single application, they are not sending 100,000 applications."

He noted that an anonymous investment banker had been quoted this week as saying that the Lloyds sale would be "cleaner and neater if we did not have the retail offering". However the government had to lead by example, and could start by simplifying the information available to retail investors. "This information doesn't have to be in a 300-page prospectus, you don't get that if you go and buy a second-hand car."

Mr Khalaf said: "Most companies don't tell Sid they are floating to the stock market, only offering their shares to institutional investors. It's only right the government is going down the route of a truly public offering for Lloyds, seeing as taxpayer funds bailed the bank out in the first place."

He said 14per cent of do-it-yourself investors already held Lloyds shares, and income fund managers were already building up positions.

Lloyds, which began a token dividend this year, has a dividend yield forecast for 2017 of between 3.7 per cent and 7.9 per cent.

A Conservative pre-election pledge said investors would be able to apply for between £250 and £10,000 of shares and, if the shares are held for a year or more, they would receive a bonus of one extra share for every 10 held, subject to a value cap of £200. The shares will be priced at a discount of at least 5per cent, but the sale may not be possible until early early next year.

Charlotte Black at wealth managers Brewin Dolphin commented: "Lloyds is one of the few European banks that has shown it can deliver good underlying profitability in this increasingly challenging regulatory environment. It is ahead of its peers, has a stronger capital position and has resumed dividend payments."

She added: "The uncertainty of the election is removed so we may look forward to a retail float, but we hope that the costs and inevitable inefficiencies of a retail offer to thousands of private investors will not outweigh the anticipated discount."

Laura Lambie, senior director at Investec Wealth & Investment in Edinburgh, said: "Scottish clients of all the different investment houses will have been sitting on Lloyds and RBS shares since 2008 - at least Lloyds is paying a dividend now. But they are going to have to make it an attractive offer to get it off the ground."