It was always probable that the uncontrolled expansion of higher education would call into question the assumption that a degree of a similar class in one university would be the equivalent of the same degree in another.

The findings of the research commissioned by the Higher Education Quality Council based on the performance of "old" universities is more disturbing. It does not take much insight to know a first class degree in physics at Cambridge is not the same thing as a degree in media studies from the University of Loamshire. But to learn that some established universities consistently award more first and second class degrees than others do is more worrying. It could, of course, be the case that the universities in question were getting better students. But it is noted that some had below-average entry requirements. And in general it is admitted by most of those with close contact with the university scene that all entry standards are lower than they used to be.

The other possible explanation is that the universities which give more first classes and upper seconds are teaching more effectively. But it is hard to believe that in universities there has been a general improvement in the effectiveness of teaching. Despite all the nonsense talked about information technology and visual aids, what matters most is the personal contact between student and teacher. Given the steadily increasing number of students and the other calls upon the time of university teachers through the administrative tasks placed upon them, how could there be more contact?

The aggregation of degrees of different classes is bound to conceal differences between subject areas. But this variation exists in the best-regarded universities. It may simply reflect the fact that students in some disciplines are better motivated, seeing their achievements in terms of their future careers. Or it may be that some faculties are more demanding about entry standards and so get a smaller proportion of marginal students. But if the proportion of upper-class degrees in the same subject differs widely from one university to another that is clearly a matter for concern.

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It may be the universities in question are letting standards fall so that neither students nor their future employers are getting what they have the right to expect. And it may be that students who believe that the outside world attaches more importance to the class of degree they obtain than to where they obtain it will flock to those universities which seem to offer better chances of getting good degrees.

If a university's concern is parity of esteem, the opposite attitude would be taken. When 20 years ago I became responsible for what is now the University of Buckingham, I saw to it that the standards of the degrees were upheld by external examiners drawn from major universities. My instructions to them were that they should ignore the unusual and heterogeneous nature of the student body. They were to judge Buckingham students by the same criteria as they applied to their own students. It would have worried me if such a student body produced many firsts or upper seconds.

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The author of the HEQC report, Keith Chapman, believes that the whole system of classified degrees has become an "anachronism", and given the number of institutions and their variety, he is probably right. Certainly the system by which standards are maintained by external examiners is hard to update. The calls upon senior university staff not only for administrative duties but for publications needed to bolster their departments' claims for research money - another folly of our times - makes it impossible to expect that external examiners can be found to give to their tasks the time and concentration which could once have been expected of them.

What can be put in place of the existing conventions is hard to see. Classification itself can hardly be abandoned. There is a need to know on the part of those admitting graduates to post-graduate study or professional training or wishing to employ them. Some egalitarians who argue that giving grades for GCSE or A levels are wounding to those destined not to get good ones, would no doubt be happy if a BA or even PhD could be awarded automatically to every leaving student - as is the demand in some Third World nations. But egalitarianism is on the retreat.

So classification in some form is likely to persist and there seems little evidence that in itself the present scheme should be superseded. But it cannot survive on the basis of equality between widely different institutions with widely different conceptions of their role and duties. We must find a way to group universities in a number of sets within which guaranteed equality of standards can be assumed. The US provides a number of examples.

Whether the will exists to face this issue is uncertain. After all, if every teacher can be styled professor why distinguish between students? It is a sad reflection on the position that at a time when "statesmen" of all parties are keen to avoid the inflation of the currency they seem indifferent to academic inflation which is an equal threat to a nation's prosperity.

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Lord Beloff is a Conservative peer.