A “CITY deal” which could unlock millions of pounds to fund major transport projects and create jobs in Oxfordshire has been approved.

Deputy Prime Minister Nick Clegg last night announced that Oxfordshire was one of 20 regions included in the second wave of City Deals.

Eight cities that already have such deals – including Bristol and Manchester – have been promised billions in public and private investment, to fund road improvements, public transport and job training.

The Oxfordshire deal will focus on expanding the so-called “knowledge-based economy”, which includes the scientific research carried out at Harwell Laboratories Culham Research Centre and the two universities.

Over the next nine months, councils, universities and business leaders in the county will thrash out the specifics of the deal with Whitehall.

City Council leader Bob Price said: “It’s an exciting step forward and gives us a real opportunity to work with businesses and the universities to drive a knowledge-based economy in the Oxfordshire region.

“Money will obviously form part of the negotiations. We haven’t asked for a specific figure.”

But cities that already have deals have secured millions in Government funding, matched by private investment.

County council leader Ian Hudspeth said: “It’s fantastic news because this will give us the ability to shape the destiny of Oxfordshire.

“The next stage is going to be very detailed and they will be looking at our proposals for growth.

“The important thing is infrastructure, because that’s one of the biggest complaints people have about Oxfordshire. If we can invest in the infrastructure, growth and jobs will follow.”

He said the region was trying to emulate the joint working seen in Manchester, which was one of the original eight city deals.

The authorities and organisations involved will be expected to borrow cash or invest from reserves.

They will be given the power to reap the rewards of their investments by clawing back extra business rates revenue.

Oxfordshire will also be prioritised for Government funding, in areas such as transport. That cash would be used to fund infrastructure projects aimed at improving traffic flow on the A40 and A34.

But the bid is not expected to give the city council more direct control over transport, despite the fact it will play a part in the decision-making process if funding is awarded.

Mr Clegg introduced City Deals last year, as a way to give local authorities more powers, with less control by central Government.

Last night, he said: “Letting go of power and money doesn’t come naturally to Whitehall. Rather than let our industries and communities wither, we need to free up cities outside of London that have their own unique selling points.”

The news has been welcomed locally.

Oxfordshire Local Enterprise Partnership chairman Adrian Shooter said: “It will be an important boost to the local economy.”

Professor Andrew Hamilton, vice-chancellor of the University of Oxford, said: “We are very encouraged by this news, the bid for the deal is something on which many people across the city and county worked very hard.”