I hear what you say Copthall, and you are right it's mainly the teachers complaining although every child I know on or near an English grade boundary this year is now feeling cheated too thanks to the media coverage. But I don't square you saying there were 40% fewer A/A grades for Eng. Lit this year with Ofqual saying there were 1.5% fewer A-C grades, or the bbc saying that the numbers of A*/A grades for Eng. Lit. were 23.2% this year compared with 25% last year which is hardly the dramatic fall you are claiming, especially when you think they've been rising progressively year on year for the last 20 years.
The cohort ability won't change much year on year, but there were a few (~4%) jumped ship to iGCSE this year and those will in the main have been higher ability, so this year the average level probably is ever so slightly lower.
Universities will take broadly the same number of students for Eng lit courses each year and choose the best of those who apply. If in a couple of years it transpires that you are right and a lot of their applicants have Bs and they can't fill their places with students who got As, then they will have to relax their standards a bit - they will obviously be selecting the best candidates from those who apply.