Universities are to hold a sector-wide inquiry into the increasing number of first-class and upper second-class degrees awarded, following a report that warns of potential damage to the integrity of UK higher education.

The report led by the Quality Assurance Agency for Higher Education concludes that while it is difficult to pinpoint the causes, perceptions of grade inflation could erode the usefulness of honours degree classes and undermine confidence in academic standards.

“The evidence presented in this study is not conclusive evidence of either inflation or improvement,” the report, co-authored by the Universities UK group, concluded. “It is nearly impossible to demonstrate concretely one way or another.”

The report found that improvements in student performance, better teaching and increased efficiency “only explain a certain proportion of the uplift” in degree classes, with around 10 percentage points of the rise in firsts since 2011 unable to be explained.

The number of graduates gaining an upper second-class (2:1) degree has risen by 55% in the last decade, while the number of first-class degrees alone has doubled to 26%. At the University of Wolverhampton the proportion of students awarded firsts has risen from 5% in 2007 to 28% a decade later.

About three out of every four graduates at UK universities are now awarded a 2:1 or above. Surrey awarded first-class degrees to 41% of its graduating cohort in 2017, compared with the University of Cambridge awarding 32%.

Public attitudes, including employers’ perceptions that first and 2:1 degrees are “good” degrees, may also act as incentives. Noting that institutions with a high proportion of upper degrees receive a boost in some league table, the report said: “Where competition to attract students is high, institutions have an incentive to perform well in league tables.”

The decision to launch a consultation was welcomed by Damian Hinds, the education secretary.

“We want and expect to see results improve over time, but the scale of this increase in firsts and 2:1s cannot be proportionate to improving standards,” Hinds said. “Universities have a duty to maintain the value of the degrees they award.

“A key strength of our higher education sector is its independence, but with that comes responsibility. I am looking to universities to tackle this issue and have asked the Office for Students to focus on tackling grade inflation and firmly deal with any institution found to be unreasonably inflating grades.”

The consultation is to be led by the UK standing committee for quality assessment, and will consult on publishing analysis of each institution’s awards policy, the role of external examiners and review the current use of first-, second- and third-class degrees.

Meanwhile, an evaluation of leading universities’ progress on improving access found another year of little improvement. Despite spending nearly £750m on widening participation in 2016-17, the report by the Reform thinktank found “no significant progress” in recruiting disadvantaged students by 29 institutions, including Oxford and Cambridge.