Philip Hammond has rejected claims the Government is offering extra cash to Northern Ireland to get the DUP to back Theresa May’s Brexit deal.
The Chancellor said “that’s not where the discussion has been at all”, although he acknowledged that funding issues would come up in the forthcoming spending review.
Mr Hammond, who was involved in talks with DUP deputy leader Nigel Dodds on Friday, said the discussions had focused on preventing a regulatory border in the Irish Sea.
One option being considered is a “Stormont lock” written into law so that any new regulations imposed on Northern Ireland would either be adopted by the entire UK or not at all, the Sunday Times reported.
Mr Dodds is also reportedly looking for a cut in air passenger duty, which is lower in the Republic of Ireland than Northern Ireland.
The Government may also have to find another £1 billion to secure a further two years to the confidence and supply arrangement which underpins Mrs May’s minority administration in the Commons.
On BBC’s Andrew Marr Show, Mr Hammond said: “I regard it as crucially important that we do not allow differences to grow up between Northern Ireland and Great Britain.
“And we’re looking for ways in which the Government can reassure Northern Irish politicians about our clear intention to make sure that there are no such differences as we go forward, if the backstop ever had to come into force.”
He added: “This isn’t about money. It’s about a political assurance – well, look, we are coming up to a spending review and we will have to look at all budgets, including devolved block-grant budgets, in that spending review, of course we will.”
In a statement on Saturday, the DUP said: “We are in discussions with the Government to ensure Northern Ireland is not separated out from the rest of the United Kingdom as we leave the European Union.
“Contrary to some reports we are not discussing cash.
“There are still issues to be addressed in our discussions.”
But shadow chancellor John McDonnell said: “If Philip Hammond’s presence at the talks with the DUP is an indication that the Tories are offering the DUP another bung in return for their support for May’s Brexit Deal, I am warning the PM that she is in danger of destroying all confidence in our political system.
“It will rightfully be seen by the British electorate as corrupt politics and will demean our political system in the eyes of the world.
“Who could ever again trust the probity of our system of government?”