I am having difficulty choosing between the two particular models. The C3 (£11k) is pushing the boat out a bit and means taking out finance. It’s a big investment compared with the U3(£4.5k).
I don't think he'll have any problems learning on a good upright or grand, but I guess the grand is the real thing.
When you say you're having difficulty, although he's 11, why isn't he picking the piano?
Does he like yamaha pianos, the sound, the action and if so, does he like those particular models?
Personally I would say don't stretch your budget to breaking point. There might be other things to spend the difference on later. Similarly, why buy new?
Supposing, for the sake of argument, what you [or he] would really want is a Bosendorfer or Steinway or whatever else, obviously the budget is through the roof, but why put yourself into debt unless it is for a dream, once in a lifetime piano purchase that he's picked himself and really wants? If that's the case for the Yamaha, fair enough, Valentino Rossi's had a successful career

Finance probably means you'll end up paying OTT for that grand in interest, which unless it is his ideal instrument seems doomed to lose you more money than necessary when you come to sell it to buy something else.
I doubt very much that a decent, well maintained 2nd hand grand or upright is going to make a jot of difference to how well he plays [You wouldn't pay 11 grand for one if they didn't last a few years after all] and you might have the cash. You might get a fair %age of the money back when the time comes to replace it. Moreso if he decides to focus on the clarinet, the guitar or the girl next door in a few years you won't have a grand piano you don't want / need.
So I'd say if you've got the budget to buy a decent well-maintained grand, new or 2nd hand get one, but if not, get a similar condition upright, but avoid finance unless it's absolutely necessary.