"I am a passionate believer in the benefits of equity shares and they play an important role in the remuneration process at Hamilton Bradshaw," said Mr Caan who is one of Britain's best known entrepreneurs.

"It is also a model we encourage our portfolio companies to follow and we have found equity shares are be a very effective method of improving staff engagement and loyalty," he said.

Deputy Prime Minister Nick Clegg said yesterday that offering shares to employees would improve productivity and foster economic growth.

He said that the coalition had plans to reform the tax system so that it encouraged employee ownership of companies.

Mr Clegg said that he was hoping to work towards creating what he referred to as a ‘John Lewis economy' (all permanent staff members at John Lewis are ‘partners' in their £8.2 billion turnover businesses).

Mr Caan said that staff turnover could prove particularly expensive for small companies and that equity shareholdings had been found to be effective in reducing the number of staff leaving a company and absenteeism.

"Equity ownership also has an important role to play in Britain's economic recovery. There are 4.5 million small and medium-sized enterprises employing more than 13 million people in the UK," said James Caan.

"It is within this sector that we will create the majority of new jobs and yet 75% of SME's are still one-man bands. If equity shares can be used to improve commitments to small companies just think of the potential boost to Britain's employment levels."

"From an employers point-of-view including equity shares as part of an employment package can be the difference between a good offer and a compelling one," he said.

The Deputy Prime Minister said: "I don't value employee ownership because I believe it is somehow 'nicer', or more pleasant alternative to the rest of the corporate world.  Those are lazy stereotypes."

"Firms that have engaged employees, who own a chunk of their company, are just as dynamic, just as savvy, as their competitors. In fact, they often perform better."

Mr Clegg said that he hoped to create a new era of "responsible capitalism' and that the government was considering legislation which would give every employee the right to receive equity share in the companies they worked for.