David Willetts has suggested separating teaching and examining in higher education along the lines of schools – in part to make it easier for “new entrants” to join the sector.

The universities minister said such a change would create a more “competitive” system and “transform incentives” to raise the quality of teaching.

In a speech at Oxford Brookes University today, he said: “I want to float an idea that I think could transform the incentives to focus on high-quality teaching.

“We can do it by separating teaching and examining, creating new institutions that can teach, but do so to an exam set externally.”

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He added: “It has generally been assumed that any home-grown institution offering higher education must award its own degrees. But I am interested in looking at whether some institutions could benefit from linking themselves to an established exam brand with global recognition.”

New and existing institutions that chose to offer external exams could deliver “robust standards”, he said, while being able to expand immediately without the need to build a reputation from scratch.

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Making explicit reference to the possibility of new providers in the sector, he said: “Just as I previously worked on supply-side reform for schools, I am keen to see new higher education institutions: the experience of other countries suggests that non-traditional higher education institutions can widen participation, reduce costs and raise standards.

“It could be easier to guarantee this if new institutions also had access to the security, quality-assurance and reputation that comes with externally examined degrees.

“And there could be a real competitive challenge to universities, forcing them to focus more on teaching.”

However, he added: “You will see the obvious parallel. This is like schools preparing students for external exams. And that is the greatest drawback. For many people nowadays, what defines a university is precisely its power to award its own degrees, and I’m not trying to take that away from any institution.”

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Mr Willetts’ speech came after he sparked a huge row by telling The Guardian newspaper that the cost of degree courses was a “burden on the taxpayer that had to be tackled” and that students should see fees “more as an obligation to pay higher income tax” than a debt.

Aaron Porter, president-elect of the National Union of Students, said: “Students will graduate owing an average of £23,500, and David Willetts’ suggestion that students and families have somehow misunderstood the nature of student debt beggars belief.”

simon.baker@tsleducation.com