The Government must invest in the development of hydrogen vehicles in case they come “out of the blue” and eclipse electric cars, ministers have been warned.

Business minister Nus Ghani was told that hydrogen-powered vehicles may supersede battery-powered electric cars and unexpectedly wipe out investment, in a situation likened to the railways outmoding the UK’s 19th century canal system.

The warning came as the minister told MPs about Tata’s plans for a new £4 billion battery factory in the UK which will create thousands of jobs.

The Government has confirmed it stepped in with subsidies to help Tata choose the UK site, but Ms Ghani would not be drawn in by Labour’s calls to reveal how much had been spent.

In the Commons, Labour MP Barry Sheerman (Huddersfield) said: “I don’t want to be a downer on this, but when the canal system was built, by the time that they finished building the canal system everybody lost their shirt on their investment because railways came and it wasn’t expected, and it wiped out all that investment.

“Can I warn her, I have just visited JCB where they have developed hydrogen powered vehicles, and would she make sure that the Government gives equal focus on hydrogen because many of us believe hydrogen will, actually rather like railways and the canals, come almost out of the blue and be the major much more sustainable mode of transport of the future.”

Ms Ghani said the Government’s Automotive Transformation Fund (ATF) was not “just about electric vehicles”, adding: “Hydrogen is very much in our sight too.”

Shadow business secretary Jonathan Reynolds meanwhile pressed the Government on how much taxpayer money has been used to help Tata choose the UK site.

He said: “Of course, to secure this investment, a substantial amount of public money has had to be spent. The minister didn’t actually reference that, and I wonder if she can provide some clarity on the media reports we have seen as to how much exactly that will amount to.”

Accusing the Government of stealing ideas from Labour’s green prosperity plan, Mr Reynolds added: “This approach of using public investment to leverage in a much greater degree of private investment is the approach that we have advocated in Labour’s green prosperity plan.

“Now, Government ministers have at times publicly disagreed with this proposal, but we always knew they were in talks that involved the same approach. And I therefore put to the minister that it would be far better to set up that Government approach openly, transparently and honestly, in order to attract more potential partners and be able to negotiate from a stronger position.”

Tata’s gigafactory is planned to be one of Europe’s largest battery cell manufacturing sites when production starts in 2026, employing 4,000 people directly.

Each year around 40 gigawatt hours (GWh) of battery cells will be produced at the site, enough to meet half of what Britain needs to produce annually by 2030, according to one estimate.

Tata had reportedly been eyeing two sites that could house its new European battery factory, with the other in Spain.

The Prime Minister and Energy Secretary Grant Shapps have declined to reveal how much the Government had offered in subsidies to the Indian conglomerate, and have said the figures would come out at a later date.

Ms Ghani would also not be drawn into revealing how much the Government support was worth, simply saying: “He is talking about the cost. We have the ATF (Automotive Transformation Fund) fund. It is there exactly to support initiatives like this.

“It’s a £1 billion fund. And this is exactly the sort of initiative that we should be supporting.”