I did my first undergrad when Polys were still around (and no fees). I saw two big phases of expansion, the first when Polys become Universities, and the next one where there were government targets to increase the proportion of graduates. I have done some teaching at a 'new' University and a small amount of helping tutoring at a RG University. The differences in the standard were very sizeable. I think that the logic is fairly simple, on average if one course asks for two E grades at A level, and another asks for three A grades at A level, then you have a very different set of students. Whilst people can change a lot at age 18, on average you are not going to get a massive change (not in my experience anyway). You will end up with very different courses.
I don't think that the big issue is closing courses down. I also think that any sensible employer will know the difference between Universities. A degree will get you through the door, but won't automatically get you a job. So other than the 2.1 hurdle I don't think that this is really an issue. For me the biggest issue is value for money for students. If I were paying 9K/year for my education I would want to know about the quality, rigour and value for money that I'm getting. I also think that University isn't for everyone, if you're not the academic type then there are many other routes. Some people mature a bit later, so maybe the thing to do is go and work for a bit, then resit those A levels that you didn't do so well in - don't just sign up for the first course that will take you.
To believe that all degrees are the same is very naive - especially that all broad grade bands are the same level of difficulty, quality and rigour.