Mr Hammond struck a markedly more diplomatic tone over the emerging One Yorkshire plan compared to previous ministerial interventions on the issue.
But the Chancellor underlined the Government’s focus for devolution is on economic development in major cities and their surrounding areas with Leeds and Sheffield a priority.
Mr Hammond was in Leeds having earlier met the metro-mayors in Greater Manchester, Liverpool and Tees Valley elected this year after those areas struck ‘devolution deals’ giving them powers to make more major decisions locally.
A similar deal in South Yorkshire has stalled and the rest of Yorkshire has previously failed to reach agreement. However, 17 of the region’s 20 councils have now backed the principle of a region-wide devolution deal.
Mr Hammond told The Yorkshire Post: “Obviously if something is put forward to us we will look at it and the system is flexible enough to have different approaches in different regions.
“The short answer is, we definitely need Leeds and Sheffield at the table.”
Mr Hammond said it was a “disappoinment” to the Government that the major urban areas of West and South Yorkshire had not secured deals, and elected metro-mayors, in the same way as other parts of the North.
“I know that there are new ideas formulating now, we will obviously look at proposals that are put to us but we have to look at what the purposes of these combined authorities is.
“It is to allow a functional economic geography to accelerate the rate of economic development, to harvest the benefits of working across the whole economic geography across the boundaries that sometimes separate city council areas from their hinterlands. That’s what it is all about and proposals need to be mindful of that driver.”