FEARS are growing that Tata has been unable to find a buyer for its UK operation, with one Westminster source telling City A.M. that the Indian giant's retention of the business is now "a racing certainty".
Tata has been seeking a buyer for the business since March, and was expected to publish a shortlist of contenders this week following a board meeting in Mumbai.
However, the firm unexpectedly pulled back from doing so, claiming it was still in the process of evaluating bids. Now some people close to the deal believe that Tata will be unable to seal a deal.
If it keeps hold of the operation, the British government may provide support to keep it running.
The government has previously offered to take a 25 per cent stake in the business alongside a new buyer, but sources say Tata's expectation is that government investment "will be part of the deal" if it cannot find a buyer.
"It's a racing certainty. Sajid Javid has been doing everything he can to make Tata stay. He sees that as the least risky option," one said.
"But the danger is that people will say that we have been played because Tata is going to try and squeeze every single drop out of the government that they can."
A BIS spokesman did not rule out the government buying a 25 per cent stake of the business from the Indian firm, but added: "All of the support we have put forward is for a potential buyer. If Tata change their mind we would have conversations with them about what kind of support we can offer."
A spokesman for the steelworkers' trade union, Community, said: "As long as it remains operational, my expectation, and my hope, would be that the government maintains that offer of support, regardless of who the owner is."
A Tata spokesman said: "We are engaged in an ongoing process and finding a responsible buyer to buy the whole of the UK operations remains our top priority."