Born in Kirkby, Lancashire, Caton was a centre half who played for and captained England schoolboys before signing for Manchester City as an apprentice in 1978. He was a member of the City team that reached and lost in the 1979 and 1980 FA Youth Cup finals. Caton made his senior debut for City on 18 August 1979 aged 16, and soon became a regular in the City side, playing in the 1981 FA Cup Final against Tottenham Hotspur when still only 18 years old. When Tommy Hutchison put City in the lead it looked as though Caton was on his way to collect a winner's medal, but Tottenham levelled as a result of Hutchison's own goal, a replay was forced and City lost it 3–2.