Northallerton was a dramatic defeat for the Scottish army, but it did not destroy King Davidís army or his challenge for control of Cumbria and Northumberland. The king soon rallied his forces in Carlisle and he achieved a negotiated settlement which achieved most of his original objectives.
The papal legate, then in Carlisle, arranged for the Scots to release the women and children that they had taken as slaves. He then negotiated a peace treaty in which Stephen renewed the offer that he had made before the battle. Stephen it seems was concerned to negotiate a settlement before having to face an expected invasion from the continent by Matilda. The terms included the granting of the Earldom of Northumberland to Davidís son Prince Henry, and enabled David in effect to advance his frontier to the rivers Tees and Eden. It is true that Stephen retained a royal garrison at Newcastle and Bamburgh, while Prince Henry was required to administer his lands from England. But in effect the northern counties of England were under the control of a Scottish king.
It would not be until 1157, under Henry II, the ultimate beneficiary of the Civil War, that the northern counties would finally be recovered. By then the English kingdom was no longer divided by internal conflict and could field forces that were more than a match for the Scots.