Corby, Crawley and Croydon are bidding to join Cambridge as university towns, it was announced yesterday. Basildon, Basingstoke, Dudley and Stockport are also among 27 areas in England bidding for funding to launch new higher education (HE) centres, said the universities secretary John Denham. They are among the first places to apply to take part in the government's "university challenge" initiative, launched in March.

Denham said the project would help regions hit by the recession by providing education and regeneration in rural areas as well as cities. Opposition MPs accused the government of "knocking up" the idea to compensate areas which had been earmarked for casinos but missed out after the project was scaled back at the beginning of the year.

Partnerships of regional development agencies, local authorities and colleges have put together bids for the universities centres, which will teach a range of degrees but fall short of being standalone universities because they will not have their own degree-awarding powers or privy council approval.

Universities in neighbouring areas will be a crucial element in the partnerships accrediting the degrees. The government wants 20 new higher education centres planned within the next six years. The new centres could provide study places for up to 10,000 students.

Ministers want the centres to open up the chance to study for a degree for people who would not have given much thought to a degree previously. According to economists, every extra job a university creates is matched by another elsewhere in the economy, such as in restaurants and bars, to cater for the student population.

But Martin Freedman, head of pay, conditions and pensions at the Association of Teachers and Lecturers, said: "Some of the 27 towns interested in setting up higher education centres already have successful further education colleges. We don't want these colleges and new universities to compete for students at each other's expense.

"In the light of the government's cap on the number of extra HE students, this proposed university expansion raises questions about how additional universities can function if limits are placed on the number of students?"

Universities are already struggling to fill their places after ministers were forced to cut the numbers funded to go to higher education next year. Last month, Denham froze additional student numbers after admitting the government had botched its estimates for student grants and could no longer afford its support package.

University hopefuls

Areas bidding to run universities: Accrington, Basildon, Basingstoke, Corby/Kettering, Crawley, Croydon, Doncaster, Dudley, Ebbsfleet, Halifax, Havering, Herefordshire, King's Lynn, Milton Keynes, Rochdale, Rotherham, Sandwell, Scarborough, Shropshire, Somerset, Stratford Island, Stockport, Swindon, Thurrock, Wakefield, Wallsend and Wirral

Corby, Crawley and Croydon are bidding to join Cambridge as university towns.

They are not alone. Basildon and Basingstoke, Dudley and Doncaster are also in the running to add academic gowns to their attractions, not to mention Wallsend and the Wirral.

A total of 27 areas in England are interested in establishing new higher education (HE) centres, the universities secretary John Denham confirmed today.

They are among the first places keen to take part in the government's "university challenge" initiative, launched in March.

We suspected Harlow, Grimsby and Blackpool would be among the contenders to become HE hotspots but they do not feature on the list.

Ministers believe that the centres will open up the opportunity of higher education to more young people and adults who would not have given much thought to a degree. They should also help local economic and social regeneration.

According to economists, every extra job a university creates is matched by another elsewhere in the economy, such as in restaurants and bars to cater for the student population.

Denham said: "In these challenging economic times never have universities and colleges been more important to education, economic development, regeneration and the cultural life of our rural areas, towns and cities.

"It is my ambition is to build on the successes of the last few years which have seen new centres of higher education transforming local economies and the lives of local people."

He said it was not too late for other areas to register their interest.

Hefce plans to consult on the assessment criteria for the formal bids for new HE centres, and publish proposals in the New Year.

The funding council will then work on developing proposals before deciding which get funding.

The government wants to open or commit to 20 new HE centres over the next six years, subject to quality bids.

The new centres could provide study places for up to 10,000 students.

HE coldspots: the applicants
Accrington
Basildon
Basingstoke
Corby/Kettering
Crawley
Croydon
Doncaster
Dudley
Ebbsfleet
Halifax
Havering
Herefordshire
Kings Lynn
Milton Keynes
Rochdale
Rotherham
Sandwell
Scarborough
Shropshire
Somerset
Stratford Island
Stockport
Swindon
Thurrock
Wakefield
Wallsend
Wirral

There was a time, not so long ago, when vainglorious politicians and neurotic bureaucrats saw to it that grand projects in Britain routinely failed. Think of the Millennium Dome and the national joke that was the Football Association's rebuilding of Wembley.

So the idea that London should even consider staging the 2012 Olympics seemed mad. But what sold it to me was a once-in-a-generation opportunity to inject serious investment into the East End of London, where I live. True, billions of pounds of taxpayers' cash created the spectacular yet soulless Canary Wharf office development in the Eighties and Nineties. But 'Wall Street on the water' has always been a self-contained bankers' ghetto. The deprived London boroughs of Newham, Tower Hamlets and Hackney muddled on regardless.

The East End Games promised a substantial legacy: affordable homes, an Olympic-sized swimming complex, a national basketball centre, tempting campuses for creative industries, improved transport and jobs, even a BMX track. Living just off the Murder Mile in Hackney (so named for good - or should that be bad? - reasons), this was the stuff that appealed to me.

Just bidding for the Games achieved previously unattainable results. So awful was transport in the East End, an early International Olympic Committee bid inspection concluded, that Labour had no choice but to fund a new £1bn train line linking Hackney, one of the few London boroughs without a tube station, to the rest of the network, after years of vacillation.

The Olympic Park site, for decades a contaminated urban wasteland where overhead electricity pylons killed any prospect of regeneration, would see the cables buried and the centre of gravity shift east in 21st-century London. But it was more than this. My grandad, a Jewish refugee from Nazi Germany, took his son, my late dad, to the 1948 Games in London. I liked the idea that the Games could act as a glue 64 years later in the most ethnically diverse part of the most international city in the world.

If the cost escalated, so be it. How often does an opportunity to lay down structures to build what eventually will be 30,000 new homes in a neglected part of the capital come around? But here we are in the midst of a global financial crisis and I'm scared the East End Olympics are fast turning into the 'Whatever Games'.

Think about it. The £9.3bn Olympic budget is nothing in the context of a £500bn bail-out of British banks. But because banks aren't prepared to lend cash to build the Games, the government has to step in. As a result, everything is being downsized, including the Olympic dream. In the last month, the London 2012 plans have shrunk alarmingly. Originally, the Olympic Village was to have bequeathed 4,200 much-needed homes to rent or buy immediately after the Games. Six months ago, that was revised down to 3,300. Last week it went down to just 2,700.

Central to the original bid was the Aquatic Centre, which was to become a community facility complete with leisure attractions - slides and wave machine - which was bound to attract the young and boost their sense of well-being. That has now been scrapped. What we are left with is a pool that has quadrupled in cost to £303m.

The broadcast centre was meant to be a 1.2million sq ft media hub once the 20,000 journalists covering the Games left. After temporary buildings are removed in September 2012, what will be left is a building a fifth of its original size.

Those in the know say there has been a failure by the Olympic authorities and developers fully to identify future tenants for the centre, despite interest from globally renowned news media firms looking for cheap office space.

Maybe it's the little things that best illustrate how we are in danger of heading towards the 'Whatever Games'. Earlier this year, my daughter's year four class was one of 12 from primary schools in the Olympic boroughs given digital cameras to document 'My World'.

The kids were told images would be beamed on screens in the Mall during August's handover party. Those who set up the project agree the resulting snaps offer a powerful, innocent insight into the East End from a rare perspective. Yet six months later, those pictures have never seen the light of day.

There is a strong sense that the organisers are too nervous to let the world see the real East End. But denying those youngsters their chance to shine and the sense we are compromising the legacy of 2012 means one thing: those who live on the Games' doorstep will lose interest in a transient jamboree. And the enthusiasm the East End Games would inspire was the real reason we wanted them in the first place.

In the middle ages, the centre of the community was the medieval castle. In the 18th century, it was the mines and the manufacturing industries. Today, it is the university. So said Sir Ron Dearing, the life peer and ex-chancellor of Nottingham University, in May. And many in higher education will tell you this is true. Universities, they say, lie at the core of our cities.

They are often the largest employer, the business with the biggest turnover and a, if not the, key player in the city's civic culture, development and reputation. Universities UK, the umbrella group for vice-chancellors, says higher education now generates more money than the aircraft and transport sectors put together.

Prof Kel Fidler, former vice-chancellor of Northumbria University, says he has heard the joint turnover of his university and the University of Newcastle (£0.5bn) is greater in today's money than the turnover was of the shipyards in the heyday of the Tyne, when Newcastle was one of the world's most important shipbuilding centres.

The two universities employ almost 4% of the city's estimated 190,000 citizens with, between them, up to 7,000 staff. One in every seven inhabitants is part of the universities or Newcastle College.

The former vice-chancellor of Southampton Solent University, Prof Roger Brown, says in 2000, his former university and the University of Southampton together generated £300m out of an estimated £4.2bn that the city annually contributes to its regional economy.

But it's not all about money. Queen Mary, University of London, has had a major influence on the regeneration of Mile End, where its main campus is located. The University of Cumbria, which has campuses in, among other places, the cities of Carlisle and Lancaster, was formed last year to serve "the needs of a widely dispersed rural and urban community across a wide geographical area".

Prof Chris Carr, vice-chancellor of Cumbria, says: "We see the new university lying at the heart of the community. In turn and in time, I would want the community to see the university at its centre."

It's not just universities, however; schools, housing associations and community centres are also at the heart of cities, says Ty Goddard, director of the British Council for School Environments. "Universities certainly have a key role in cities, but so do other institutions," he says.

Let's not forget the downside to having a university at the centre of a city. Where there's a campus, there are also students living nearby and unscrupulous landlords waiting to exploit them. Quickly, areas around a campus can degenerate into dingy student ghettos. Locals are pushed out to make way for term-time-only students, who sometimes misbehave on the street and live in homes that nurses and teachers need. A spokesman from the Design Commission for Wales, who does not want to be named, says developers "get away with high-rise student housing which can blight a city".

Perhaps one of the best indicators of how central a university is to its city is how many of its graduates stay to live there. A study last year found that of 600 final-year undergraduates and postgraduates at the University of Sussex, 40% planned to stay.

Which goes to show that a student's relationship with the city in which they live and study doesn't simply end with the degree course.

? We originally described Kel Fidler as the vice-chancellor of Northumbria University but understand he has since changed jobs and is now former vice-chancellor