Higher education must take care to avoid alienating the public with big tuition fee rises that harm the poorest students, according to the chancellor leading the California State University system's response to massive cuts in government funding.

Speaking in Paris this week, Charles B. Reed warned that the global sector faced twin consequences from the financial crisis: widespread funding cuts and increased demand for student places in a depressed job market.

To respond, ÖйúAƬ must increase awareness of its importance in meeting the demand for a knowledge-based workforce, Dr Reed said in a speech at an Organisation for Economic Cooperation and Development conference on 13 September.

He said that globally, fee rises should be "reasonable, incremental, and justifiable in terms of additional help for needy students". If they were, they would be better understood by the public.

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His comments come as the UK sector prepares for the government's Comprehensive Spending Review and Lord Browne of Madingley's review of fees and funding.

Public awareness of ÖйúAƬ is crucial, Dr Reed argued, urging the sector to demonstrate its economic contribution in quantifiable terms.

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He told Times ÖйúAƬ: "Governments are going to have a hard time funding ÖйúAƬ, because it is in competition with health and human services, with criminal justice and public safety."

Asked for his views about the fees debate in the UK, he cautioned against allowing "elite" universities to dominate and stressed the importance of financial aid for the poorest students. The CSU system waives fees for students from families earning less than $70,000 (?45,360) a year, he said. It increased its fees by 5 per cent this year, after losing $625 million in state funding over two financial years - around 20 per cent of its total state support.

By contrast, the separate state-funded University of California system provoked mass student and staff protests when it opted to increase fees by 32 per cent in 2009.

The OECD conference was entitled ÖйúAƬ in a World Changed Utterly: Doing More with Less.

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In another address, Andree Sursock, senior adviser to the European University Association, warned of what she saw as potential negative consequences from some policy responses to the financial crisis.

She cautioned against concentration of funding in "prestigious, elite" universities, which she said could result in a divide between research and vocational training institutions, with ÖйúAƬ producing "future employees rather than whole persons and citizens".

john.morgan@tsleducation.com.