Oxford City Council has voiced its disappointment after Oxfordshire County Council vetoed a devolution deal which it argues could have brought billions in investment to the Thames Valley.

Councils across Berkshire, Oxfordshire and Swindon had spent over 18 months developing a proposal for a Foundation Strategic Authority, the first step towards a directly elected Mayor with powers similar to those in London and Greater Manchester.

The plan would have boosted a regional economy worth £97bn – the UK's third largest – through devolved powers over transport, skills and infrastructure, according to the city council.

However, the new Liberal Democrat leader of Oxfordshire County Council rejected the proposal on 17 June, a day after the devolution minister wrote endorsing it.

Asked yesterday at a full council meeting about the decision to reject the deal, Oxfordshire leader Tim Bearder insisted the proposed deal would have added another layer of local government costing £1m a year for which the council would have received £250,000 a year to pay for.

He argued it would have ‘represented a tax on the people of the Thames Valley’, adding that the council needed to be ‘much more ambitious’ and that he hoped a new deal would be made once Andy Burnham becomes Prime Minister.

The deal has also been rejected by Windsor and Maidenhead Borough Council. ‘We want the strongest devolution agreement for the region and the borough, with powers and funding that regions with mayoral strategic authorities are given. That's currently not on offer,’ a spokesperson told The MJ.

Cllr Susan Brown, leader of Oxford City Council, said she was ‘very disappointed’ but remained committed to pursuing devolution for the region, adding she hoped the conversation could be revisited ‘with changes in national leadership and local government.’