Theresa May is ready to consider a dramatic U-turn on university tuition fees to woo young voters back to the Tory Party.

The bombshell move was signalled yesterday by her most senior Minister, Damian Green, who said a ‘national debate may well be needed on this huge issue’.

He said the Tories were doomed unless they reacted to the surge in support for Labour, especially among the young, and called on the party to ‘change hard’. Millions of students voted Labour following Jeremy Corbyn’s vow to scrap tuition fees, slashing the Tory lead.

Prime Minister Theresa May attends a press conference at the end of a two-day EU Summit in Brussels late month

Mr Green also hinted at a fundamental rethink in the Conservatives’ approach to capitalism amid criticism of its austerity policies, saying:

‘The discontent with capitalism since the 2008 crash, which is vaguely expressed as being anti-austerity, needs to be tackled head-on.’

The Tories must adapt to the changed political landscape or risk ‘serious long-term damage to the party’s electoral prospects,’ he said, adding that his party had to be ready to ‘recast our core beliefs in a manner that captures the prevailing mood of the era’.

And he took a sideswipe at Mrs May’s predecessor David Cameron, saying renewing Tory support among the young was about more than ‘hugging huskies, cuddling hoodie-wearing teenagers and PR stunts’.

Mr Green’s comments are believed to have been sanctioned by Mrs May. She promoted him to First Secretary after the Election, effectively making him her deputy. The two have been close friends since they met at university.

However, even Mrs May did not escape criticism as Mr Green said the language she used in a hard-hitting attack on the anti-Brexit ‘metropolitan elite’ last year was ‘too tough’.

His speech in London reflects the scale of Tory alarm at the growing popularity of Mr Corbyn, but it will spark concern among traditionalists who have warned against a panic reaction to Labour gains at the Election. Mrs May could face claims that such major changes could further undermine her claim to be ‘strong and stable’.

Work and Pensions Secretary Damian Green appearing on the BBC One current affairs programme

Less than two months ago, she scorned Mr Corbyn’s pledge to axe tuition fees, saying: ‘Tuition fees will remain. You have to ask Labour how they would pay for all they are proposing? We’ve seen how Labour governments wreck the economy. If you wreck the economy then you can’t support students.’

Experts say axing tuition fees would cost £8 billion a year.

Mr Green’s remarks come after claims Mrs May is ready to scrap the one per cent pay cap on public sector workers. Michael Gove last night became the latest Cabinet Minsister to call for the cap to be lifted.

A further indication of the tensions inside the party came yesterday with a fierce attack on Mrs May by anti-Brexit Tory MP Anna Soubry. She said David Cameron had ‘spent ten years making us electable which we almost trashed in ten weeks’.

And ex-Chancellor George Osborne said: ‘If the Party doesn’t move towards the centre this will be its last spell of government,’ warning that ‘a more moderate, Labour leader would have won the Election’.

Prime Minister Theresa May (2L) sits with Britain's First Secretary of State Damian Green (L), and Britain's Parliamentary Secretary to the Treasury, and Chief Whip, Gavin Williamson (3L) as they talk with Democratic Unionist Party (DUP) leader Arlene Foster (2R), DUP Deputy Leader Nigel Dodds (3R), and DUP MP Jeffrey Donaldson, inside 10 Downing Street

After delivering his speech to the Bright Blue think-tank, which campaigns for the Conservative Party to adopt liberal policies, Mr Green was asked about his message for students who backed Labour in anger about tuition fees. He replied: ‘This is clearly a huge issue.’ He added that the only way to cut fees and maintain standards and student numbers would be by raising taxes, ‘and it may well be that this is a national debate that we need to have’.

The Tories are 30 points behind Labour among 18 to 35-year-olds, and Mr Green said. ‘If young people feel the world isn’t giving them an even break they look for radical change, even if what is being promised, by populists, is just a better yesterday. Ukip hankers after the 1950s, Corbyn’s Labour the 1970s, with both hoping that nobody under 40 reads a history book and sees the glaring faults in those eras.’

Mr Green also said the Tories – including Mrs May – had to tone down their rhetoric, warning: ‘You can deliver a hard-nosed message without using the wrong language.’

Last night, there were no signs that Mr Green was being disowned by No 10. Asked about his remarks, a Government source merely said there were no immediate plans to scrap tuition fees.