And Hutchings sees the central defender as a significant signing for the club.
"We are delighted to have secured Clayton's services on a permanent basis," he said.
"He settled into the club extremely well during his loan spell and is an emerging player of undoubted talent and ability.
"He has been given an excellent grounding in the game at Manchester City and we will reap the benefits as he continues his development here at Walsall. This is a good signing for the club."