The announcement of 10,000 extra university places to placate anxious A-level students and their parents was in danger of backfiring on the government on Monday, after business leaders accused it of trying to offer degrees “on the cheap”.

Employers’ bodies, leading universities and scientists attacked the decision to offer more places without giving universities the full Treasury funding they usually receive for each new student. Lord Mandelson, whose new business super-department includes universities, said it would fund support for living costs, and give loans to finance variable tuition fees, for 10,000 extra undergraduates. However, this does not include the teaching grant it usually funds for each place.