Cameron faces biggest test over £9,000-a-year university fees

Universities said they will be left with no choice but to massively increase fees as they face huge cuts in Government funding, with claims institutions in Yorkshire alone face cuts of more than 337m and fees of 7,000 simply to break even.

Students – who face leaving university with debts of more than 35,000 once loans for living expenses are included – condemned the plans as "outrageous" and warned Deputy Prime Minister Nick Clegg to expect an electoral "backlash", while Ministers faced unease from both sides of the coalition as well as opposition from Labour.

The Government insisted its plans to increase the cap on fees from the current 3,290 a year would put university funding on a sustainable footing and said it was being progressive because students will only have to start repaying when they earn 21,000 – up from 15,000 at the moment – and charging a higher interest rate for big earners.

But it left Prime Minister David Cameron facing his first major rebellion as a string of Liberal Democrats – including Leeds West MP Greg Mulholland and former party leader Charles Kennedy – said they would not break an election pledge to oppose any increase in fees, although Ministers are confident the measures will get through the House of Commons.

Mr Mulholland conceded the proposals were "more progressive" than those suggested in the recent Browne Review into higher education funding but added: "I cannot accept that it has to be tied to an increase in fees, and that's something that I cannot and will not accept."

The Government is also facing some unease from Conservative MPs, with Brigg and Goole's Andrew Percy admitting to "concerns", although he confessed he did not know of a "credible alternative".

"I don't like it and I think I'll probably not support it," he told the Yorkshire Post. "I don't rule out voting against it."

Universities Minister David Willetts said the increase in fees – to be introduced in time for the 2012/13 year – was a "good deal for universities and for students", with those who charge 9,000 having to ensure access for disadvantaged students.

For the first time, students will be charged a real rate of interest once they earn enough to repay, paying up to three per cent over the higher Retail Price Index rate of inflation.

Accountants in Grant Thornton's Leeds office said a student earning 40,000 could end up repaying nearly 32,000 for fees alone over 20 years – not including the extra 10,000 once loans for living expenses are taken into account.

Shadow Business Secretary John Denham said middle income earners would be hardest hit despite Ministers promising mortgage-style penalties of up to five per cent for richer students who pay off their debts early.

He released figures which show that universities face cuts of up to 80 per cent in teaching funding so income from increased fees would plug the hole in state grants. Universities in Yorkshire alone face funding cuts of more than 337m.

Students reacted with fury at the plans, with those in Sheffield singling out Mr Clegg, MP for Sheffield Hallam, because Liberal Democrat MPs had signed a pre-election pledge to oppose any increase in fees.

Josh Forstenzer, of Sheffield Students' Union, said: "Students will not sit by and watch this happen. Those MPs who signed the pledge will face a backlash."

Aaron Porter, president of the National Union of Students, accused ministers of failing to provide reassurances on access, employability or the quality of courses.

"The only things that students and their families could expect in return for higher fees are higher debts," he said.

But Professor Michael Arthur, the vice-chancellor of the University of Leeds, said: "This announcement ... sends a loud signal that the government recognises the importance of higher education to the future of our country, its economy and the ability of universities to help the country out of recession."

Labour leader Ed Miliband warned there would be anger at "promises made and promises about to be broken" by Lib Dems the Prime Minister accused him of playing political games.

MORE HELP FOR THE POOREST STUDENTS

Universities will be able to charge tuition fees of up to 6,000 – or 9,000 if they sign up to a National Scholarships programme to help poorer students.

Students will repay fees when they start earning 21,000 at nine per cent of salary, with any outstanding debts written off after 30 years.

For the first time, those earning over 21,000 will have to pay a real rate of interest – the rate will be tapered up to a maximum three per cent over inflation.

Maintenance grants for poorer students will be increased.