LONDON • British Prime Minister Theresa May's Conservatives struck a deal yesterday with the Democratic Unionist Party (DUP) that will allow them to govern despite losing their majority in a general election this month.
The agreement with the ultra-conservative Northern Irish party was signed in Mrs May's Downing Street office after more than two weeks of negotiations following her disastrous electoral showing.
Under the terms of the deal, Northern Ireland will receive an extra £1 billion (S$1.7 billion) from the state over two years, in exchange for DUP supporting the Conservatives.
Mrs May will also abandon Conservative pre-election plans that would have cut guarantees to pensioners on the level of state pensions and on payments to subsidise winter-heating costs, she said.
The Conservatives have 318 seats in the 650-seat Parliament after the June 8 general election and need the support of the DUP's 10 MPs to be able to govern.
The deal is a "confidence and supply agreement", meaning the DUP will guarantee to support the Conservatives only in confidence and budget votes. For other measures, support will be on a vote-by-vote basis.
"I welcome this agreement which will enable us to work together in the interests of the whole United Kingdom," Mrs May said.
DUP leader Arlene Foster said: "This agreement will operate to deliver a stable government in the United Kingdom's national interest at this vital time."
She said the extra money would be spent on infrastructure, health and education, benefiting the whole of Northern Ireland after concerns voiced by the republican Sinn Fein party, the DUP's rival.
The Conservatives' deal with the DUP will prove controversial because of the party's opposition to gay marriage and abortion and concern that the agreement could upset the fragile balance of the peace process in Northern Ireland.
Political parties are still locked in negotiations to form a semi-autonomous power-sharing executive for the province nearly four months after local elections there.
London's neutrality is key to the delicate balance of power in Northern Ireland, which was once plagued by violence over Britain's control of the province. If the parties cannot come to an agreement by Thursday, Northern Ireland may be returned to direct rule from London.
The sterling gained 0.1 per cent to 0.2 per cent against the US dollar and euro after the deal, which peeled away one layer of uncertainty for Britain as it negotiates its exit from the European Union.
The first test of the agreement will come on Thursday, when votes are due to be held on Mrs May's legislative agenda for the next two years.
Mrs May yesterday announced details on how she intends to protect the rights of 3.2 million EU nationals residing in Britain once the country leaves the bloc in 2019.
She said that all those legally in Britain before a cut-off date to be decided in future negotiations would be allowed to stay and apply for permanent residence rights.
"I want to completely reassure people that under these plans, no EU citizen currently in the UK lawfully will be asked to leave at the point the UK leaves the EU."
The Premier said she wanted a reciprocal agreement to guarantee the rights of one million British citizens living in other EU countries.
AGENCE FRANCE-PRESSE, REUTERS, BLOOMBERG