Conservatives and Democratic Unionists remain “miles apart” on key elements of a proposed deal to shore up Theresa May’s minority Government, a DUP source has said.

Sticking points are thought to involve DUP demands for additional funding for Northern Ireland, with reports suggesting they are seeking £1 billion for health and similar figures for infrastructure.

The failure to bridge differences casts doubt on Mrs May’s ability to get her Queen’s Speech through Parliament, with senior minister Damian Green acknowledging it is possible that no agreement will be reached in time for the crunch Commons vote on the package on June 29.

While the DUP has historically voted with Conservatives in a majority of divisions, party sources indicate that the support of its 10 MPs should not be “taken for granted”.

They have a record of opposing Tory austerity and welfare measures in the last parliament, and it is understood that they could support opposition amendments in these areas during the six-day Queen’s Speech debate.

DUP insiders are thought to be arguing that failure to reach agreement on a “confidence and supply” deal could cost the Conservatives more in the long run, as they would be forced to come cap in hand for the party’s support on a vote-by-vote basis in the years to come.

One source told the Press Association: “They thought they had us in the bag and they wouldn’t have to pay a price for it.”

Senior Conservative sources said talks with the DUP were ongoing in the hope of reaching a confidence and supply arrangement, under which the Northern Irish party would not join the Government but would guarantee to ensure its survival by voting with it on financial measures and no-confidence motions.

The DUP is also looking for a more generous deal from the Treasury over the planned devolution of corporation tax powers, as well as cuts in air passenger duty.

A DUP source said officials within the Northern Ireland Office are urging caution on a deal because of concerns that the Government could compromise its status as an honest broker in peace process talks.

But Mr Green insisted that there was still “every possibility” of agreement.

Damian Green said "there's every possibility of a DUP deal" (David Mirzoeff/PA)
Damian Green said “there’s every possibility of a DUP deal” (David Mirzoeff/PA)

“The talks have been taking place in a constructive way,” the First Secretary of State told BBC Radio 4’s Today programme.

“Clearly, two political parties, we have some differences, but we have a lot in common. We’re both unionist parties at our heart.

“We’re both, obviously, very concerned with combating terrorism, we both have similar views about delivering a good Brexit for this country, and, obviously, we’re both very, very concerned with the Irish border issue.

“All talks of this kind take a long time, they are still continuing.”