He is young and could develop into something big or he could burn out like Walcott is doing.
Yes you pay for the potential. You don't just pay for what you have in front of you. He can turn into something big, that's why you pay big money for him. This isn't a FIFA game.
And there's a quota on English players in the Premier League, you have to have a certain number in your squad, surprisingly there are not an unlimited number of English players. That is why English players are valued higher. They are not "way too expensive" they are the result of massive demand coming into contact with small supply.