Communities Secretary Sajid Javid has offered a lifeline to the supporters of a One Yorkshire devolution deal after telling council leaders they may be allowed to join if they commit to a more limited Sheffield City Region agreement first.
In an effort to end the months of deadlock on how vital powers and funding will be transferred from Whitehall to the region, Mr Javid said that Barnsley and Doncaster councils could potentially join the region-wide agreement.
But, in a letter to civic leaders in South Yorkshire, he said that to do that they would need to first fully sign up to the Sheffield City Region deal the two authorities rejected in September after signing up two years earlier.
He wrote that once the £900m Sheffield City Region agreement had been fully implemented, some or all of the councils could choose to join One Yorkshire, providing all the region's other authorities had agreed on a pan-Yorkshire deal.
The shift in position by the Minister prompted one Yorkshire MP to claim the devolution stalemate 'could be settled by the end of January if there is political will'.
And Sheffield City Council's leader described the letter as a "welcome intervention" that could "provide a way forward" for South Yorkshire.
It comes on the eve of the result of a historic community poll to be announced by Doncaster and Barnsley councils over which of the two devolution deals residents support.
Earlier in the summer 17 out of 20 councils in Yorkshire formed a 'coalition of the willing' to support such an agreement, though in October it emerged that Harrogate was no longer among them.
Mr Javid, who is expected to meet Yorkshire council leaders to discuss the issue early in 2018, has previously stated that he would reject any devolution deal that undermined the Sheffield City Region agreement signed by then-Chancellor George Osborne in 2015.
In a letter published online by the BBC, he wrote: "The aim of any compromise, as I see it, should be to open the way for the people and businesses of South Yorkshire to have the full benefits of the Sheffield City Region deal, whilst not in any way precluding your council and others from pursuing their ambitions for a One Yorkshire deal."
Setting out the compromise agreement, he wrote: "Barnsley, Doncaster, Rotherham and Sheffield councils now agree to do as soon as practicable after the Mayoral election all that is necessary for the existing Sheffield City Region deal to be fully implemented, eg to undertake the consultation on the functions to be devolved to the Combined Authority and Mayor and to give their consent to any Order effecting that devolution.
"At the same time, the Government, Barnsley, Doncaster, Rotherham and Sheffield Councils also agree that if a One Yorkshire deal comes forward and is concluded and agreed by the councils concerned and by Government, some or all of the South Yorkshire councils would be free to join that deal subject to certain provisos, particularly that arrangements would be put in place to maintain the integration of transport across South Yorkshire.
"Statute provides that once the Mayor is elected he or she takes affect on the fourth day after the election, and once the Mayor is in office his or her consent is needed to any order devolving powers or making changes to the combined authority, eg an order providing for one or more councils to leave that combined authority.
"For an agreement along the lines above to be meaningful, it will be necessary for the Mayor on taking office to assent to the agreement."
Responding to the news, Keighley MP John Grogan, a supporter of the One Yorkshire deal, said: "I think it is welcome that the Secretary of State has for the first time recognised that an All Yorkshire solution is not only possible but that he has by implication apparently dropped any objections in principle to this solution.
"He has also agreed to talk to the South Yorkshire authorities and accepted the principles of a two stage solution. I hope that with a little bit more Christmas cheer and New Year good will he can go that extra mile and agree to meet in January all councils in Yorkshire who want to move, by say 2020, to an All Yorkshire model.
"I can see no good reason for delay. If there is political will this could all be settled by the end of January."
Julie Dore, Leader of Sheffield City Council, said: "We believe that this is a welcome intervention which would see the South Yorkshire deal fully delivered, in line with what we have been proposing for some time and repeated at the debate last week.
"We are pleased that this is something the government is now backing and, whilst we would want to carefully consider the proposal so we can iron out a few of the details about how exactly it would work, we hope that this could provide the basis for a way forward to deliver the investment that we need in South Yorkshire."
Barnsley MP Dan Jarvis said: “I welcome this letter as a signal by the Government that they are prepared to compromise, and that they acknowledge that the Sheffield City Region deal is the first step towards a wider Yorkshire deal.
"The precise wording of any agreement will need to be carefully considered by everyone concerned, but the Government’s suggested text provides a basis for discussion and subsequent negotiation.
"It is in the best interests of the people of Yorkshire, that we work together to forge a new political consensus that unlocks the huge potential that exists in our region."
Henri Murison, Director of the Northern Powerhouse Partnership, which represents civic and business leaders, described the letter as a "welcome offer" of compromise.
He said: “By making it possible to join with a future negotiated Yorkshire wide settlement there is now clarity that the only way to reach that outcome is to have a Sheffield City Region Mayor first, who would need to agree that their own position would only last until it was replaced by a deal which would be in the better interests of local people.
"Whether there is a preference for either one Yorkshire or a Sheffield City Region deal tomorrow when detail of public views who have responded is announced, whatever the turnout, the approach of compromise means that a two stage deal to reach One Yorkshire can and should be viewed as the way to fulfil any mandate for a pan Yorkshire settlement – because the Secretary of State has today made that the way to achieve it.
“Those such as Dan Jarvis MP and fellow parliamentarians who have as we do wanted to secure progress on devolution which gets investment in transport and skills to develop the economy have seen our calls for compromise listened to – which I certainly welcome.”