Higher education heads should prepare to fight their corner in one of the toughest ever public expenditure rounds this autumn, Michael Bichard, permanent secretary of the Department for Education and Employment, has warned.

Vice chancellors and principals must contest criticisms of the sector publicly and show they are taking a positive attitude to the financial challenge facing them, Mr Bichard told delegates at the ³ÉÈËVRÊÓƵ Funding Council for England's annual conference last week.

In return "influential people" should start judging higher education against its significant achievements rather than pressing for restrictions on student numbers in the belief that this will protect quality, he added.

Mr Bichard's comments were in marked contrast to recent suggestions from Eric Forth, the higher education minister, that expansion was beginning to threaten quality. Mr Forth angered v-cs at a London conference last month by implying that standards were slipping but this was not linked to funding.

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Mr Bichard said: "It seems to me that too many influential people in this country still behave as if the only way to protect quality is to keep numbers down in the belief that if you increase numbers in the system it will corrupt quality. The quality of higher education should be judged by its number of successes rather than the number of people it excludes."

The permanent secretary said vice chancellors should brace themselves for what was likely to be "the most difficult PES round anyone can remember" this year. They needed to work with the DFEE to build a strong case for protecting a healthy level of funding for the sector, and respond to any criticisms. The slowness of university heads to react to attacks in the media last year had made it more difficult to argue against cuts in the November budget, he added.

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"What we have to do together is to ensure that the strongest possible case that can be made for higher education is made. If we are to do that then it must be a case which is based on hard evidence and sound arguments rather than rhetoric and bluster," he said.