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.
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.