Besides local income generation, universities also teach students at all levels, so that one of their principal 'outputs' (if I may put it that way), is a flow of graduates who move on to work in all areas of the labour force, both in the UK and overseas. Typically (on average, and varying between disciplines), graduates earn a wage premium over non-graduates, and by assessing this carefully we can arrive at an additional benefit of the university. In effect, we take the view that the university contributes to the process of making people more productive in the workforce.
Through their innovation and knowledge transfer activities, universities can also benefit local and national firms in many different ways. How effectively they do this will depend both on their skills in building local links and business partnerships, and on their main subject areas. Moreover, to the extent that this aspect of a university's activities is beneficial to business, we need to be thinking in terms of quite long-term, and usually highly uncertain benefits.
One way or another, though, all of the above is about economic benefits - no bad thing, but surely not the full story!
And recently, I've been reading a fascinating book that puts forward a much broader view of what universities are all about. This is Stefan Collini's book, What are Universities for? (Penguin Books, 2012). He argues forcefully, and I think rightly, for the value of intellectual investigations per se, taking the view that understanding our world, and helping others to do so, is both a socially valuable activity and the mark of a civilised society. He acknowledges, of course, that whatever universities do they have to live within their budgets; but at the same time, he argues that we should be far less defensive than we often are, and should not feel we always have to defend what we do in the university in terms of its putative economic benefits.
Given his starting point, it is not too surprising to find that Collini is no supporter of the modern idea of the 'student as customer', since he doesn't see the university as evolving into a new form of supermarket. Nor is he a fan of the modern audit and accountability ethos that besets our universities, as is evident from his remarks about the beginnings of research assessment back in the 1980s: 'This was a key step towards the all-devouring audit culture that has since so signally contributed to making universities less efficient places in which to think and teach.' (p34). In the same vein, Collini is very critical of our current approaches to making teaching more accountable through setting aims and objectives and the like, arguing that it tends to replace academic judgement with form filling and formal procedures.
Overall, he urges us to see our universities as custodians of an important part of our scientific, intellectual and artistic heritage, and valuing this properly calls for a wider and much more long-term perspective than is implicit in the current tendency to focus on the narrow economic benefits. I agree.