Rishi Sunak has said it was not just taxpayer money that enticed Tata to announce a new £4 billion battery factory in the UK which will create thousands of jobs.

After months of negotiations, Tata Son, the company behind Tata Group, said it had selected the UK for its next big battery investment.

The Indian conglomerate is widely reported to have chosen Somerset but refused to confirm the location.

It 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. It was not immediately clear why it chose Britain.

The Government confirmed it stepped in with subsidies to help Tata choose the UK site, but ministers and spokespeople repeatedly refused to give details.

Prime Minister Mr Sunak said: “When I was chancellor, I set up the automotive transformation fund, which was always there to provide targeted investment in strategic industries where we thought it would make sense.

“But what is crucial about an investment like this is it’s not just going to be about that, it’s going to be about the quality of the workforce that we have here, the quality of our infrastructure, the road and rail connections, the approach to regulation, the competitiveness of our tax regime, which we have changed to make it more attractive for businesses to invest.”

Downing Street would not be drawn on whether support from the Government was worth £500 million or even as much as £1 billion.

“Some of this stuff is commercially sensitive, it’s not in the UK’s interests to get into all the detail when negotiating with companies,” the Prime Minister’s official spokesman said.

He promised, as did Energy Security Secretary Grant Shapps, that the figures would come out at a later date.

Talking to Sky, Mr Shapps said: “The exact numbers on this will come out in the normal way. Because of the commercial sensitivities, they have to be released in the usual way.”

Asked on BBC Breakfast about a Financial Times report that the Government was providing £1.5 billion in subsidies, Mr Shapps said: “That doesn’t sound right to me.”

The Government’s support to “enable this investment” was acknowledged by Tata Sons chairman Natarajan Chandrasekaran.

Tata refused to reveal the exact location it had chosen, but it has been heavily linked to Bridgwater in Somerset.

Because it is eight miles from the Hinkley nuclear power plant, the electricity grid in the area is likely to be already strong enough to handle the increased demand the factory will bring.

Gigafactories need access to a lot of electricity and big cables. For instance Britishvolt, a start-up that went bust earlier this year, chose the location of an old coal power plant in the North East of England.

On Thursday, voters in the Somerton and Frome constituency are to vote in a by-election to select a replacement for its former MP, David Warburton.

Asked if it was unusual to announce such a decision so close to polling day, the Prime Minister’s spokesperson said: “We would take any relevant advice in regards to by-elections in how we are making these announcements, as we have done with this.”

Prime Minister Rishi Sunak told reporters during a visit to Warwickshire: “Today’s announcement is a fantastic vote of confidence in the UK.

“Across the world, international businesses are showing that they are confident in the UK economy. They’re putting money behind that confidence and that is going to create real jobs and opportunity here at home.”

Mr Shapps said the investment will create 4,000 jobs directly and thousands more indirectly, such as in supply chains.

Tata did not say how many jobs it expects to create.

“This will produce a gigafactory that can produce about half the UK’s electric vehicles batteries,” Mr Shapps told Sky News.

“It has been nine months in negotiations, I’ve been involved with it throughout, including going to India.”

Earlier this year, Britishvolt went out of business.

Despite having little experience in the sector, it had promised to build the UK’s first gigafactory, but could not raise enough money to push ahead.

Vauxhall maker Stellantis said in May that it would struggle to make electric cars in the UK without changes to the Brexit deal.

It said it is vital to “reinforce the competitiveness of the UK by establishing battery production”.

West of England Labour mayor Dan Norris said: “After so many false starts, this is fantastic news for the West of England.

“However, the lack of a coherent industrial strategy means this historically rail-connected site will only be accessible by road. That’s a mistake.”