David Willetts: Why higher education is getting better by degrees

A lot has happened since Parliament agreed to increase the student fees to £9,000 in December 2010. At the time, we argued that this controversial decision was necessary because it was preferable to the main alternatives – significantly reducing student places or funding each place inadequately. That remains true. But the first students within the new system have recently completed their first term of study, so it is a good moment to take stock.

The main method for funding undergraduates is no longer grants from a centralised funding agency but taxpayer-backed student loans. No eligible person has to pay university tuition fees upfront; they pay back only once they are earning more than £21,000, as graduates through the tax system. This system ensures our universities are well-funded. We predict the total income for higher education institutions for teaching home and EU students will increase from £8bn in 2012/13 to £9.1bn in 2014/15.

As part of the new system, we have also strengthened student choice. In the past, universities were told exactly how many students to take, with penalties for over-recruitment or under-recruitment. We have liberalised student number controls so that universities can accept as many high-grade students as they can attract. One of my new year resolutions for 2013 is to give universities even more flexibility over their numbers.

Some critics claim our funding mechanisms ignore the public benefits of higher education. We do recognise the wider social and economic benefits of having more graduates. However, our reforms have just shifted the balance, so that now graduates make a greater contribution to the costs of their own education and taxpayers pay less. According to the OECD, our reforms shift from taxpayers covering 60 per cent of the costs and graduates 40 per cent, to taxpayers paying 40 per cent and graduates 60 per cent.

There is more support for students and graduates, too. We have increased maintenance support, made up of non-repayable grants and repayable loans. We have introduced a more progressive repayment system that encompasses lower monthly repayments than under the previous system.

And we have retained direct public support for subjects that are either more expensive to teach (such as sciences, engineering and medicine) or especially vulnerable (such as modern languages, after the last government's decision to reduce language teaching in schools).

The result, according to Ucas, is that application rates for people from disadvantaged backgrounds have held up well, or even increased. Nonetheless, there was a decline in the total number of new applications for higher education in 2012/13 and this fed through to a decline in overall enrolments, too. I would rather this had not happened, but the fall is comparable to that of 2006 when fees were last raised. Moreover, the key factor seems to have been a drop in the number of people taking a gap year as a means to avoid the higher fees. This meant more people enrolling at university in 2011 and fewer in 2012, which exaggerates the year-on-year effect.

The application data for 2012/13 include other information that is a challenge for the whole education system. There are now more women who enter university each year than there are men who submit a Ucas form. That marks a tremendous achievement for women, who were in a minority among undergraduates as recently as the 1990s. But it is also the culmination of a decades-old trend in our education system which seems to make it harder for boys and men to face down the obstacles in the way of learning. That is a challenge for all policymakers.

The Ucas cycle for entry in 2013 is now well under way. Many people will have spent part of their Christmas break completing a Ucas form or helping someone else complete theirs. The initial deadline for some courses – those at Oxbridge and in medicine and veterinary science – has already passed and the numbers are slightly up on 2012/13. But provisional data for other courses show a further decline. This cannot be due directly to England's tuition fees, as the fall has occurred in all four nations of the UK, but it shows there are no grounds for complacency.

One reason for a delay in the submission of Ucas forms may be the massive improvements we have made in the information available for prospective students. This is likely to lengthen the decision-making process on what and where to study. Previously, prospective students would rely on friends and family to discover a university's reputation. Middle-class families with a history of higher education were able to negotiate that system best, but even their information was often out of date or based on a hunch rather than evidence.

That is why we launched the Key Information Set in October. It provides 17 core pieces of information on 31,000 higher education courses and is one of our reforms of which I am most proud. The data includes the costs of studying, student satisfaction and employment outcomes and is available for use on others' websites too. The official websitee, unistats.direct.gov.uk, has received nearly 150,000 visitors, alone.

To complement this, we have been running a student finance tour that puts recent graduates into schools and colleges to explain how the student finance system works. But information challenges remain, which we are determined to tackle during 2013 – working with the Office for Fair Access and universities themselves. One target is parents, who reportedly understand the details of the student finance system less well than their children.

Another target needs to be prospective part-time learners, as we have extended tuition loans to part-time students on the same basis as full-time ones for the first time. This under-rated change rights an ancient wrong, and delivers the extra support for part-time learners that Robbins, Dearing and Browne agreed was important.

But it is not only the journey to university that matters. What happens when you get there is even more important. The National Student Survey shows most students enjoy high-quality teaching, although some are less satisfied with assessment and feedback, and in some cases the teaching experience has just not been good enough. The challenges on teaching are not universal but they are serious.

Our universities rightly appear at the top of the world's league tables but these tend to be weighted towards research rather than teaching. Students are not straightforward consumers and going to university is not like buying a service. But they deserve the same protections as other consumers and, ultimately, the framework of consumer protections can apply to education the same as anything else. I am pleased to see the National Union of Students working with the Consumers' Association on their popular new website university.which.co.uk.

Our goal is to ensure the incentives to deliver world-class teaching become as strong as the incentives to deliver world-class research. The greatest strength of our university sector is its autonomy – one recent survey found we have the most autonomous universities in Europe. So the way to make universities more responsive is not through diktat but through liberalising the whole system. That way, student-focused institutions will thrive and others will be forced to up their game.

We also need to give more real choice to students by ensuring the sector is more diverse. During 2013, we have allowed the first for-profit university, given permission for 10 smaller specialist university colleges to upgrade to full university status and awarded degree-awarding powers to a small number of proven institutions. We hope this is just the start and that more diversity and choice will drive improvements through the sector as a whole.

The UK is relatively well placed to help satisfy the growing demand for higher education across the world, there is no cap on the number of international students who can come and study here. But as higher education becomes more global, we need to do more to improve access to UK institutions for people who have no intention of coming to the UK. The Open University is working with a range of other leading universities to launch the UK's first massive open online course in early 2013, which will compete with those already in existence in the USA. I hope there will be other new initiatives that deliver accessible higher education, that help deliver the best match between students and institutions and which maintain the world-class status of our higher education sector.