Speaking at the Universities UK annual conference, this year held at Cranfield University, the universities and science minister said the government hoped to pass legislation on the changes by autumn 2011.
Mr Willetts said the intention was that the reforms – informed by the findings of Lord Browne of Madingley’s independent review of fees and funding – would be implemented for the 2012-13 academic year.
In a press conference after his speech, he revealed that changes to the current system of fees would be made clear by next summer.
“If there are to be any changes in the financing regime for graduates from 2012, we understand that universities would need to know that by the summer of 2011,” he said.
In a wide-ranging speech, Mr Willetts stressed that universities must make more efficiencies to tackle the funding cuts to be announced under the government’s Comprehensive Spending Review next month.
He highlighted pensions and senior management as two areas where savings could be made, adding that “we owe it to the taxpayer and the student to hold down these costs”.
Wider reforms would look at the “role and powers” of the funding council, the “demarcation lines” between further and higher education and ways to improve regulation for private providers to create a “more open market”, Mr Willetts added.
If institutions offer excellent teaching and a high-quality student experience at a fair price, then “it doesn’t matter whether they are old universities or new ones, for-profit or not-for-profit. They have something to contribute and should have the chance to do so,” Mr Willetts said.
He also argued that the balance between teaching and research had “gone wrong”.
“Universities that relegate the importance of teaching are in danger of losing sight of their original mission,” he said.
His speech was preceded by UUK president Steve Smith’s address, in which he warned that the sector faced a “triple whammy” of spending cuts, a funding gap as it waited for changes to student finance and restrictions on international-student recruitment.
Professor Smith also attacked “fundamental errors” in yesterday’s speech by Vince Cable, the business secretary, on the distribution of cuts to research funding.