British universities must slash the number of top degrees they award or risk undermining their world-class reputation, the education secretary has warned.

Damian Hinds said there had been a steep and unjustifiable rise in the awarding of first-class degrees, urging universities to “reset the norm” by handing out a higher proportion of 2:1s. Offending universities could face fines, or even be prevented from awarding degrees at all.

His warning comes after recent evidence of grade inflation in higher education. In 2016-17, 27% of students obtained a first-class honours degree from English universities, according to the Office for Students (OfS). It marked a major increase from the 16% who secured the score in 2010-11. More than three-quarters of all university students (78%) obtain an upper degree, meaning a first or a 2:1, up from 67% in 2010-11.

The data found that 50.1% of students at the University of Surrey were awarded a first-class degree in 2016-17, while 37.9% received the score at the University of Huddersfield.

We owe it to the hardworking students who have earned those top grades to stamp out this unfair practice Damian Hinds

The analysis also concluded that the increases could not be attributed entirely to increased pupil attainment and changing demographics. Hinds is demanding evidence that grade inflation is being tackled in the next academic year. Hinds has called on the OfS to challenge institutions showing clear evidence of artificial grade inflation.

“Our universities are world-class and world-leading, with four ranked among the top 10 in the world, and attracting thousands of international students,” he said. “At the heart of that global reputation is a trust in the quality and high standards of the education provided.

“Unjustifiable, artificial grade inflation threatens that. It cannot be right that students in one year are awarded higher grades for the same level of achievement than those in previous years. We owe it to the hardworking students who have earned those top grades to stamp out this unfair practice.”

He added: “I expect the Office for Students – when they have their full range of powers – to challenge those institutions that record an unjustifiable rise in the proportion of top degrees being awarded.”

The OfS is due to be handed new powers later this year, allowing it to levy fines of up to £500,000 or 2% of a university’s income. Moves are already being made by the sector to tackle the issue, including new standards to ensure all degree awards are consistent and fair.

Professor Dame Janet Beer, president of Universities UK, said institutions were determined to tackle unexplained grade inflation, but warned against confusing grade inflation with student and teaching improvement.

“The sector’s collective will to take ownership of this challenge is strong, as we recognise it is crucial that we keep the confidence of students, employers and the public in the value of a university qualification,” she said.

“It is important to draw a distinction between grade inflation and grade improvement, where increased investment in teaching and facilities, as well as students working harder than ever, are leading to legitimate increases in grades,” she continued. “Questions that are raised by this debate will not halt efforts to ensure that every student has the opportunity to get the best outcome from their study.”