Financial Assistance to Industry
(1 day, 7 hours ago)
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The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Stephanie Peacock)
I beg to move,
That this House authorises the Secretary of State to undertake to pay, and to pay, by way of financial assistance under section 8 of the Industrial Development Act 1982, a grant or grants exceeding £30 million to UDX Development Company Ltd in support of capital expenditure on an entertainment resort complex and theme park in Kempston Hardwick, Bedfordshire, up to a total of £450 million.
It is a pleasure to serve under your chairship, Mrs Barker. The motion relates to the truly historic inward investment into the UK in respect of the Universal United Kingdom resort in Bedfordshire. In June this year, the Government announced that we had reached an agreement with Comcast NBCUniversal and its subsidiary, UDX Development Company Ltd, to unlock over £6 billion in direct capital investment to construct and operate a world-class theme park and entertainment resort complex. The Committee is being asked to approve a grant of up to £450 million, under the Industrial Development Act 1982, to ensure that Universal can go ahead with its ambitious plans.
I was really pleased to visit the site in June on behalf of the Government, and to meet the 100 new staff Universal had already employed. Those 100 new employees, leading on a range of skills that include design, operations and construction management, are the first of an expected 8,500 employees who will work on site when it opens in 2031. Universal is committed to supporting opportunities for local residents and workers, and it intends to source 80% of its jobs from Bedford and the surrounding area.
Over the construction period, between now and the expected completion date of 2031, over 20,000 jobs in construction are expected to be created, with up to 5,000 on site at peak time. Again, this is a fantastic opportunity for people at all stages of their construction careers, and it is one of the single biggest investments in the visitor economy.
Universal is looking to engage people at all stages of their careers to work in the park. Empowering local authorities will also be key to making the most of this investment, by aligning local ambitions with Government priorities to unlock economic growth and to ensure that the benefits are felt locally through new jobs, skills and homes, as well as better transport.
I want to discuss the grant and where it sits in the agreement that the Government have signed with Universal. To make this highly mobile international investment come to the UK, the Government negotiated hard on a targeted support package that gave confidence to investors and the best possible value for taxpayers. There are three elements to the package: the grant of up to £450 million that we are discussing; the Department for Transport’s investment of £474 million in critical transport; and the Department for Digital, Culture, Media and Sport’s separate grant of £438 million under section 50 of the United Kingdom Internal Market Act 2020 for community infrastructure and site-wide resilience.
Members may query why we are asking for approval to spend £450 million, when the Government announced in June that the grant would be for £400 million. The difference is a result of how we have structured the agreement to benefit the taxpayer. To protect the taxpayer, the grant will be paid in arrears, no earlier than 1 April 2031, and only after the formal grand opening. To account for inflation until then, we have applied indexation of 2% a year to the £400 million, which was informed by independent forecasts, in line with standard Government practice. The calculation results in the limit of £450 million that the Committee is being invited to consider this evening. In this way, public funds will be released only once the economic benefits during the construction period have been realised.
The Government have secured robust legal protections, including a parent company guarantee from NBCUniversal, primary legal charges over the site, and a list of binding policy commitments, with clawback terms lasting 15 years. Those conditions will ensure that Universal does what it has said it will do within the park, and that it delivers benefits for the wider area. They cover matters such as providing jobs, skills and training; prioritising recruitment in the local area and from priority groups such as care leavers and veterans; working with partners such as VisitBritain on the wider tourism strategy; and participating in projects to support the creative industries.
If the Committee agrees to the motion, the Secretary of State will be able to make a decision on whether to make the grant under the section 8 powers of the 1982 Act, delivered through the exceptional regional growth fund. The grant will be a subsidy, and Members have raised questions about whether the Government consider that appropriate. To answer the question of why a subsidy is necessary, if we had not given it, Universal would not have proceeded with its investment. This Government believe in unlocking growth and delivering for the British taxpayer.
Secondly, why do we need to make the subsidy now and how does it provide value for money? As I have outlined, no money is leaving the public purse now, and spending will be made only by 2031 at the earliest, when the park is being constructed. We are confident that the benefits will have been realised before then. As for value for money, up to £450 million in subsidy unlocks over £6 billion in investment.
Thirdly, we have considered in depth the subsidy control principles in the Subsidy Control Act 2022, and the Government’s assessment has been reviewed and revised in response to feedback from the Competition and Markets Authority’s Subsidy Advice Unit. We have responded in our assessment to the areas where the SAU suggests more information could be required.
I have taken the decision today to delay approval of the motion to allow fellow Members an opportunity to review a summary of the subsidy control assessment on which the Subsidy Advice Unit has based its recommendations. Securing parliamentary approval for this motion is a vital step in confirming the UK’s commitment to this transformative project, unlocking growth and confirming that the UK remains open to investment. I commend the motion to the Committee.
James Wild (North West Norfolk) (Con)
The Minister has set out the purpose of the motion: to approve the payment of up to £450 million to UDX Development Company to support the NBCUniversal theme park and resort in Bedford. This project would be a major investment for what could become the biggest visitor attraction in the country. The initial discussions and agreement took place under the last Conservative Government, including assisting with land acquisition. My hon. Friend the Member for Mid Bedfordshire (Blake Stephenson) has been a strong advocate for the project, as has my hon. Friend the Member for North Bedfordshire (Richard Fuller).
As the Minister said, Universal has committed to spending £6 billion on this project, delivering an estimated economic benefit of £50 billion, with thousands of jobs. These are clearly substantial benefits, but then so is the proposed funding that the motion seeks to provide through the exceptional regional growth fund, which comes on top of the £438 million for investment in public infrastructure and the £474 million to upgrade the road and rail network. In total, the Government are looking to spend £1.3 billion on this project.
Given the amount of taxpayer money involved in this project and the proposed motion, it is essential that we properly scrutinise the rationale, impact and conditions related to it. I will deal first with the amount. The motion seeks authorisation to pay up to £450 million on the opening of the park, not before 2031. As the amount is over £30 million, the approval of this House is required and the Government referred this to the Subsidy Advice Unit, which is part of the CMA, to consider DCMS’s assessment of compliance.
It is important to be clear what the subsidy report is and what it is not. It is advisory, and it does not directly assess compliance with the subsidy control requirements. Significantly, the subsidy report identified several shortcomings in DCMS’s analysis around proportionality, competition impacts and the interaction between the direct subsidy and the other forms of Government support. However, the Department’s assessment, which is the basis of the subsidy report, has not been made available to the Committee. I asked DCMS to provide it ahead of this sitting, and I was told that it could not be provided because it is commercially sensitive. All we have been provided with up to this point is just over two pages of an explanatory memorandum and a briefing with officials earlier today.
Clearly, it is completely unsatisfactory for the Committee to be in the position of considering this motion without that information. I welcome that the Minister has acknowledged the disappointing approach through her commitment to provide a summary and other information, but we have not seen that today. I and other Committee members will therefore expect the Minister to respond fully to the points that we make—as she normally would—notwithstanding her commitment to delay notification of the motion until we have seen that information.
This would be Universal’s first park in Europe, and clearly there is significant competition for internationally mobile capital. The subsidy report refers to DCMS’s position, reiterated by the Minister, that without taxpayer support, private funding would not be forthcoming. Universal has said the same to me. The question is: how hard have the Government tested that in the interests of taxpayers? The report states that DCMS should explain more clearly, in line with the statutory guidance, how “uncertainty constitutes imperfect information” that may hinder investment rather than “normal commercial risk” for a project of this scale. The Government have not responded to that request for further information in a way that this Committee has seen. Will the Minister confirm that that will be covered in the summary she will make available to us?
That brings us to the overall amount and the requirement to keep the subsidy as low as possible. One of the largest recent grants from taxpayers was the £75 million to BMW for production of the electric Mini. The report sets out that the £450 million in this case was agreed through negotiation, and it refers to “materially different starting points.” Could the Minister indicate to the Committee how much Universal was seeking at the beginning of the negotiations? The amount is also predicated on projections and the rate of return that Universal would expect to achieve in funding a project, as well as on subsidies provided to theme parks by Governments in other countries. It is of course possible that if this becomes the largest visitor attraction in the UK, those projections could be exceeded. Again, the DCMS assessment, which we have not seen, apparently referred to Universal’s projections as “systematically conservative”.
The Committee is being asked to approve the motion without visibility of the relationship agreement between the Government and Universal—even a redacted one. It is therefore incumbent on the Government, as the subsidy report highlights, to be clearer about how alternative subsidy amounts could affect viability and any overcompensation. Can the Minister explain more about how the clawback mechanism would work? At what level would a clawback of funds be triggered if the project overperforms financially? Would that be 5% or 10% over the expected return? I think the Committee deserves an indication of that, because it is important to minimise any taxpayer contribution. How will funds be recovered if the agreed outcomes the Minister referred to are not met?
To continue that theme, there is also a lack of detailed information on the grant, what it will be used for and what eligible spending is. The subsidy report refers to
“expenditure associated with the construction, infrastructure, systems and other development works”.
That is all rather broad brush. Can the Minister give some tangible examples of the type of spending that might qualify? Does it cover funfair rides, for example?
The purpose of the subsidy regime is to consider the impact on competition, and DCMS’s assessment identifies Merlin Entertainments as the competitor in the UK most likely to be affected, as well as Disneyland Paris internationally. It is worth noting that any company that considers this an unfair subsidy can challenge it at the Competition Appeal Tribunal. Does the Minister accept the analysis in the subsidy report that there should be further consideration of displacement effects and the impact on investment and competition? If so, will she make sure that that is made available to the Committee?
Finally, the funding is due to be paid no earlier than April 2031. Can the Minister confirm whether the funding has been allocated to the capital budget of the Department for Business, Innovation, Science and Trade, and whether there is a funding line in its budget to pay for this? If not, will it be secured at the spending review, or is this essentially an IOU for a future Government to pay?
The opportunities that investment in a world-class visitor destination could bring are considerable. Equally, this is an exceptional funding proposal, and it is right that there is proper scrutiny of its basis, which has been the focus of my questions and contribution. The Minister needs to respond to these detailed points today and provide much greater transparency around the terms of the subsidy in order to protect taxpayers’ interests. I call on her to agree to share with hon. Members, in suitably redacted form, the relationship agreement and the assessment of compliance. I look forward to her responses.
Daisy Cooper (St Albans) (LD)
The investment by Universal is to be welcomed and it is fantastic to see that there could be employment for 8,000 people. This will create jobs and be a lively part of the local visitor economy, but it will have a huge impact on the local area—not just in Bedfordshire, but in my county of Hertfordshire.
The motion relates to one of the three grants that the Government have been looking at. I have a number of questions relating to the other grants, not least because this is one of the only opportunities we have had to put questions to the Minister about this. If she does not have the answers to some of these questions, because they do relate to some other Departments, will she write to me after today’s debate?
First, the Government are, in a separate grant, investing in transport. That is welcome and needed, but they confirmed in June 2026 that none of the money that is allocated for transport will be for improvements on the Bedford to Brighton Thameslink line, which serves my St Albans constituency. We know that the Bedford to Brighton line will exceed capacity in five years. The key bottleneck is the Croydon area to the south.
It is quite short-sighted that the Government have not sought to use any of this funding to sort out that problem. With millions of visitors expected to this destination—it will have 8.5 million visitors in the first year and up to 12.5 million in a few years, and 6 million will be domestic—the Thameslink line between Bedford and Brighton will be used by millions more people. This is short-sighted, so I ask the Minister to explain either today or in writing why none of the funding has been allocated to that.
Secondly, Bedford borough council has welcomed this investment, but as I understand it—the Minister will correct me if I am wrong—negotiations for an investment zone to be created have stalled. This Universal theme park, when it gets off the ground, will generate a huge amount in business rates, and Bedford borough council is keen to ensure that it can receive its fair share of them. When does the Minister expect the discussions to reopen and restart? Can she confirm that they will be concluded by 2031 so that the local borough can benefit before Universal opens?
On this specific SI and subsidy, the hon. Member for North West Norfolk referred to the Subsidy Advice Unit, which identified Merlin Entertainments as the domestic
“competitor most likely to be affected by the Project”.
The SAU would go as far as saying only that the negative consequence
“may be partly offset by additional domestic and international visitors attracted by the Project.”
The SAU also asked the Government to
“consider the potential longer-term effects of the Subsidy on competition and investment”,
not just for Merlin Entertainments, but, more broadly, for the current set of competitors and any future potential competitor, and particularly how it might impact investment. Can the Minister update us on whether any additional work has been done to look at the longer-term effects and impacts of this arrangement?
We know from a briefing earlier today that, effectively, this amount of money can be used for any kind of capital expenditure. It is not remotely clear to me whether it will be used for toilets, car parks or rollercoasters. Given that the Government have put in place a number of conditions and clawbacks linked to employment, it strikes me as rather odd that no conditions have been put in place relating to what the capex can be spent on. Can the Minister explain why that is the case?
The Minister said the approval of this motion would be delayed so that Opposition parties could have sight of further details. I highlight to her that it is not clear why this amount of £400 million has been deemed proportionate. We have not seen the assessment of what would be disproportionate. Would disproportionate be twice that? Would it be £50 million more? That is not remotely clear, so it is very difficult for Opposition parties to scrutinise this.
Finally, to repeat an earlier point, given my conversations with Universal—I have had a number of conversations relating to London Luton airport and transport infrastructure in the region—I found it quite surprising that the Minister indicated that Universal predicated its investment on this subsidy. It was never raised with me. That does not mean that it has not been raised with Ministers, but in my conversations, there seemed to be only one condition: the approval of London Luton airport expansion. I wonder whether the Minister can share any more with us about when that argument was put forward. Was it always the case that the subsidy was required, or was the argument introduced in the latter stages of the negotiation?
Jon Trickett (Normanton and Hemsworth) (Lab)
It is good to see you in the Chair, Mrs Barker—I am sure you will keep us under control if we stray from the chosen path.
Let me first make a broad argument. This an important Committee. We are making a decision that begins to change the direction in which the country has been governed for so long, over my lifetime—a direction characterised as basically market-led. In 1950, when I was born, there were 8 million people in manufacturing, but now there are 2.5 million; there were 700,000 coalminers, but now there are none left; and there were 600,000 people in agriculture. We are seeing the most dramatic changes in the way our labour market works, and, unless the state and the Government take an active, interventionist role in creating and restructuring our economy, I fear for our future. That is not simply nostalgia, or an old man looking back to the happy times in the past—although they were happy—but somebody saying, “This is the nature of our society now.”
I represent 23 coalmining villages, and I know that the Minister’s constituency shares many attributes with mine. This is an important investment, and, in Bedfordshire, where it will take place, there is significant deprivation in pockets, but it is not everywhere. I am not going to quote the figures, but I looked at central Bedfordshire and compared it to Wakefield, where my seat is. Poverty and deprivation are much more deeply entrenched and wages are lower in the Yorkshire coalfield than in Bedfordshire. Why is a major investment taking place in Bedfordshire rather than anywhere else? I was struck by the penultimate paragraph in the explanatory note, which says:
“The territorial extent of this programme is the United Kingdom, and the territorial application of this motion is the United Kingdom.”
My area is less than 200 miles from Bedfordshire, but it takes people who live there four and a half hours to get there by public transport. There are over 20,000 households without a car in my constituency. People in my area will not go to Bedfordshire.
This investment is important; it is a signal that the Government intend to change the direction in which this country has been governed for too long, and that is welcome. I am sure that I do not need to press the Minister very hard, because she represents a coalmining seat in Yorkshire, but when we consider trying to attract investment, let us think about the regional impact, not only in Wales and Scotland, but in the Yorkshire coalfield, which I speak for. I welcome the report we have in front of us today, because without that, it would be difficult for me to go back to the coalfield and say, “Well, I voted for half a billion pounds to be spent in Bedfordshire while representing an area of deep chronic poverty.” I make that point quite strongly.
I also received lobbying from a company that is a competitor. The hon. Members for North West Norfolk and the hon. Member for St Albans mentioned competitors, and I think the Minister will reflect on what has been said, so I do not need to add to that. I want to come to the question of state aid rules and whether this whole investment complies with the various regimes of state aid. First, we are part of the World Trade Organisation, and we are bound not to take action on state aid that is illegal under WTO rules. I assume the Minister’s advisers have looked at that, and I raised it with her yesterday to be sure. There are then the UK’s home-grown regulations in the Subsidy Control Act 2022, which also controls the way in which the Government can intervene in the economy when considering reconstructing. That is a very important part of this proposal. It looks to me as though competitors may feel that they have a legal case to challenge this decision under the existing state aid rules. Can the Minister confirm that that has been carefully considered by the civil service and her advisers?
Let me say this to the people talking about rejoining the European Union: if that were to take place before 2031 and the money had not yet gone—by the sound of it, it will not go until 2031 or 2033—would we be in breach of the much more stringent state aid rules that apply within the European Union? Let me be clear: I do not think we should join the European Union. I am against it, and always have been, partly on the grounds of state aid, which controls the capacity of a Government to begin to rebuild their economy in the way I have just described.
I just want to know this: supposing some foolish person was to say, “Let’s rejoin the European Union”, and succeed, if the money had not been released, would we be in conflict with the state aid rules in Europe when we give this money to the Bedfordshire development? I gave the Minister advance warning of this and I am sure she will have thought about it; perhaps she will write to us all if she has not.
Jack Rankin (Windsor) (Con)
The Committee is discussing and deciding on a significant and unique grant of taxpayers’ money today. In my opinion, it is inappropriate for a decision of this size to be taken in a Delegated Legislation Committee with such scant information as this. This matter should be given real, proper and timely consideration.
We all want to see the Universal project happen in this country and it is right that it has had cross-party and Government support, but let us be clear about what the Committee is being asked to approve today. There are three funding pots through which the Government have proposed to support the project. There is the DCMS grant for community infrastructure and the DFT funding pot, both of which I can understand. It is right and proper that the Government are supporting the project with wider enabling infrastructure that will support the community and enable significant direct foreign investment. But the third funding pot, which we are talking about today, is £400 million through the exceptional regional growth fund direct to Comcast NBCUniversal.
Often in life, if it looks like a duck, swims like a duck and quacks like a duck, it probably is a duck, so let us call this what it is: a phenomenal bung from taxpayers to a massive, profitable US corporation. When operated for inflation, this is around £450 million—almost half a billion pounds—in taxpayer subsidy. It is highly inappropriate and, I believe, unprecedented to make that kind of award in a quiet room like this without proper scrutiny.
I must declare an interest—not only as a taxpayer, but as the Member of Parliament for Windsor, where we are proud to have Legoland Windsor resort. I back that fantastic resort. Like the Universal United Kingdom resort will, I hope, one day become, it is a hugely successful theme park that attracts visitors from across the country and beyond and brings in investment, not to mention wider benefits for the local economy, in hotels, restaurants and other local businesses. Consider this from Legoland’s point of view. In a fiercely competitive market, it will now have to contend with £450 million handed to a competitor just up the road in Bedfordshire. Fair enough if Universal comes in on its own merits and wins custom from Legoland—it is for Legoland’s team to respond and innovate to attract new visitors—but this is putting much more than a finger on the scales in aid of Universal.
If, like me, one has free market convictions, which are perhaps broadly shared on the Opposition Benches, one could see this as a distorting bung in a competitive marketplace. However, one does not have to be a free market ideologue to see that this is unfair and distortionary and amounts to picking a winner. It is simply not fair. I appeal to more progressive ears in the room today. Is this how they think working people’s hard-earned money should be spent—on Comcast NBCUniversal? What could they spend half a billion pounds on in their constituencies? This is essentially a huge payout to one of the most successful entertainment conglomerates in the world.
We should ask ourselves what the purpose of the grant is. This growth fund is reserved for
“strategically important internationally mobile investment or to address significant economic shocks.”
Perhaps we are undergoing a significant economic shock on account of the Labour Government’s fiscal approach, but are we really classifying a theme park as some sort of national interest project? No doubt it would be hugely beneficial to the economy, and I want to see Universal bring its billions here, but under fair auspices.
I asked at the House of Commons Library to look at every such motion since 2010. Every time this House has been asked to approve more than £30 million under section 8 of the Industrial Development Act, there is a clear pattern: support for energy-intensive industries and steel, which face high energy costs; emergency support for airports during covid; investment in electrical vehicle manufacturing and the life sciences; strategic industries; or support at a time of national crisis. Half a billion pounds of taxpayers’ money in the interests of a theme park, however, is a completely novel example.
I welcome the Minister stating that this was “international mobile investment”. She is right about that, but she did not include the preamble “strategically important”. We should ask the question: does Universal really need the deal to be sweetened in that way? When the then Housing Secretary granted planning permission for the scheme, he concluded that Universal did not need to demonstrate need, describing it as:
“a commercial judgement by the Promoter in the context of its analysis of the existing competition in the UK and the potential future market.”
Universal made a commercial judgment. As any good company should, it is investing because it believes that it will make a return on that investment. A Universal resort within a train ride of London—I have every reason to believe that it will be a success, and good for Universal, but for the Government to sign over £450 million of taxpayers’ money to sweeten the deal is wrong.
There is also an evidence issue here. I would not expect many members of this Committee to have looked at the Subsidy Advice Unit’s advice and the decision making behind it. That is part of why such a significant decision as this should not be taken in a Delegated Legislation Committee. The explanatory note we were provided with states that the grant has been reviewed by the unit, part of the Competition and Markets Authority,
“to ensure compliance with the Subsidy Control Act 2022.”
Members could be forgiven for reading that and concluding that the matter has been signed off. That is not what it means. The Subsidy Advice Unit does not rule on whether a subsidy is lawful; its job is to review the Department’s own assessment and to give advice on it. In this case, its advice found real shortcomings. It expressed concerns about proportionality, which is whether the £450 million is more than is needed; about the impact on competition, which is exactly the issue for businesses such as Legoland; and about how this grant interacts with the rest of the £1.3 billion package of public support for the same project.
Those are not minor points, and yet, as far as I know, the Department has not published its original assessment and it has not set out how it responded to any of the unit’s recommendations. This Committee is being asked to authorise up to £450 million without seeing the Department’s case or its answer to the independent advice that it received. We are being asked to approve first and see the evidence later. I do not think any of us should accept that for this scale of taxpayers’ money.
The Minister has committed to publishing the Department’s assessment and the response of the Subsidy Advice Unit—if I understand her remarks at the beginning correctly—before the money is paid. I thank her for that, but this Committee should not approve this motion until it has seen those. I must stress my concerns about this motion: it is not the right way to approve half a billion pounds in public spending, let alone spending that is so obviously anti-competitive and a boon to a global conglomerate. Frankly, even the Government’s own evidence base, on which the decision rests, is shaky. I hope that Members will reject this motion, so that it at least receives some further scrutiny in the House.
Cat Eccles (Stourbridge) (Lab)
I absolutely welcome the international investment in the UK and I recognise the immense potential that a Universal resort would bring to Bedfordshire, but we must not let our enthusiasm and excitement blind us to the economic realities. We are being asked to approve a massive direct cash transfer to a multinational corporation, at a time when the global theme park industry is navigating a deeply uneven patch. In Comcast’s latest financial reporting, its theme park division, Universal Destinations & Experiences, posted a 4.4% drop in revenue and a 17.1% drop in adjusted EBITDA, earnings before interest, taxes, depreciation and amortisation. Across the wider sector, per capita spending remains high, but overall visitor attendance is softening, due to the cost of living and the reduction in travel post pandemic.
The public deserve to know that the Department has stress-tested Comcast’s ambitious projections against those market realities, and that we are acting as rigorous custodians of the public purse, not simply rubber-stamping a deal based on best-case scenarios. I must therefore pose some questions to the Minister, and I look forward to her responses on the record.
What verified independent evidence can the Department provide to prove that Comcast, a company with a market cap exceeding $150 billion, would not have invested in the UK without this £400 million—now £450 million—taxpayer bonus? Does the project delivery hinge on this money, or is it simply boosting corporate profit margins? How has the Department adjusted its long-term economic models to account for the current downturn in global theme park attendance and Universal’s own tightening profit margins? If those economic conditions persist closer to the 2031 opening date, what happens to the viability of this deal?
The Department has cited a cumulative £50 billion economic boost, but what precise percentage of that figure represents brand-new growth for the UK versus displacement? In a tight economy, a British family spending hundreds of pounds to visit Universal in Bedford is a family not spending money at Alton Towers, Blackpool pleasure beach, Legoland in Windsor or our wonderful theatres in London. Have the Government independently calculated the net negative impact that this project will have on our existing domestic tourism assets?
The Minister mentioned the Subsidy Advice Unit, but can she confirm that it has fully cleared this specific allocation under the Subsidy Control Act? If a legal challenge is brought against this non-competitive grant, who would carry the financial and legal liability—the Government or Universal? Although I note that the money will be transferred only after the park opens, what specific long-term protections do we have? What are the clawback clauses tied to the sustained delivery of the promised 8,000 jobs, or is the payout simply triggered by the opening of the gates, regardless of subsequent economic underperformance or redundancies?
At a time when public services and local authorities across our regions are facing unprecedented budgetary crises, how does the Minister justify allocating nearly half a billion pounds in a single non-competitive grant to a private entertainment empire? We must ensure that this deal delivers genuine value for money, absolute legal compliance and a net benefit to the entire UK economy.
Stephanie Peacock
I am incredibly grateful for Members’ interest and for their questions. I will first respond to the shadow Minister, the hon. Member for North West Norfolk, and the Liberal Democrat spokesperson, the hon. Member for St Albans, and I will then pick up some of the broader points.
A number of Members asked specifically about the SAU assessment and how we have responded. We have better evidenced how the indirect benefits of the project, such as visitor spend and the skills benefiting the wider economy, would not be achieved by private operators without Government intervention. We have added an explanation of how this is a unique investment, the likes of which the UK has not seen before, and so Universal bears a risk that goes beyond the normal commercial risk, meaning that HMG must provide support for the investment to be made.
We have strengthened our evidence showing why, without the subsidy or alternative subsidy amounts, UDX’s parent company would be unlikely to approve the investment. We have detailed how we will ensure that the subsidy can be clawed back by the Government, if Universal’s profits exceed a specified rate of return. We have also better explained how the subsidy has been designed to prevent market distortion, and we have included an additional assessment of the longer-term effects on the market and its competitors.
Officials met with Merlin and wrote to me last night, and I have replied to them. There is precedent for the Government making a series of subsidies in this way, with similar explanatory notes. However, as I have committed to the Committee—and to the shadow Minister when I spoke to him about an hour ago—we will delay the Committee’s decision until there is a redacted version or summary. A lot of it is commercially sensitive, which is why we cannot publish it. Any Government would take that approach, as I am sure the Committee will understand. I will make that available to members of the Committee, and the House will have an opportunity to object, if it so wishes.
The Liberal Democrat spokesperson raised a number of very valid points about transport. She will appreciate that I cannot speak to them myself, but I will reflect them to my opposite number. I have visited Bedford three times in the last six months, and I have corresponded with the borough on her specific point about tourism. Of course, as Tourism Minister, I will continue that conversation. She also made a point about this being capital spend—of course, it is a multibillion pound investment—but there are 43 criteria that Universal needs to meet. Over a 15-year period after 2031, those criteria will allow for money to be clawed back, if we see fit.
I really appreciate the points made by my neighbouring MP, my hon. Friend the Member for Normanton and Hemsworth. I am a coalfield MP myself, so I totally appreciate his point about investment and the importance of it benefiting the whole United Kingdom. This development absolutely is a one-off opportunity for this particular area. I convened a meeting of local Members of Parliament, local mayors and local authorities in August to talk about how those areas will really benefit from the skills, jobs and investment. It is such a tangible, once-in-a-lifetime opportunity.
As a Yorkshire MP—indeed, we have Members present from across the country—I know how important this is for the United Kingdom. For example, in September I welcomed 400 businesses to kick off an event in Bedford that Universal organised, where it talked through its plans for procurement and its commitment to work with British business. This will extend the length and breadth of the country. Universal held a second event in Manchester later that week, and almost 9,000 businesses from across the UK have registered interests in becoming part of Universal’s supply chain.
We really believe that this development will be a powerful catalyst for growth across the UK’s creative industries, creating hundreds of skilled, creative jobs. It will attract further investment and it will showcase British creativity and intellectual property. It will stimulate long-term growth across the UK’s creative sector, and it will bring an estimated 8.5 million visitors to the area, including 1 million visitors to the UK who would not have otherwise come. We believe that this will be the most-visited tourism attraction in the UK, and Universal’s first theme park resort in continental Europe. That is absolutely massive. This Government are on the side of growth and investment, and I commend the motion to the Committee.
Question put and agreed to.
Resolved,
That this House authorises the Secretary of State to undertake to pay, and to pay, by way of financial assistance under section 8 of the Industrial Development Act 1982, a grant or grants exceeding £30 million to UDX Development Company Ltd in support of capital expenditure on an entertainment resort complex and theme park in Kempston Hardwick, Bedfordshire, up to a total of £450 million.