Controversial “marriage” plans that would see South Hams and West Devon councils merge into a single local authority have come a major step closer with the decision to ask the public what they think.

The decision to launch a six-week consultation over whether the merger should go ahead was taken despite warnings it would hit South Hams residents with a massive tax rise and saddle them with the debts of an ailing West Devon council.

Councillors rejected a call to put the issue directly to the people by holding a referendum, amid claims it would cost £130,000 to organise.

But they did agree to totally re-write the draft consultation questionnaire documents that will go out to the public amid accusations that they were “biased” and “slanted” in favour of a merger.

The consultation will now start next month and end in October, when South Hams will have to decide whether to agree to a merger with West Devon and then wait to see if the Government will allow it.

If that happens a new council would not come into existence until 2020 – and that would be after a boundary commission review had taken place to sort out how many councillors there would be and boundary of their wards.

West Devon had already voted unanimously to press ahead with a merger consultation, while at Follaton House councillors voted by 22 to eight in favour – with the Liberal Democrats, one Green and one rogue Tory voting against.

Any merger will involve South Hams residents paying an extra £63 a year in council tax to bring them up to the same tax level as residents in West Devon.

That could be spread over up to 10 years – although the increases would be on top of any ordinary tax increases over those years.

But councillors were told that the merger would create £500,000 in savings and, along with the extra tax cash, would help fill the budget blackholes of both local authorities in the coming years.

Councillors were warned that West Devon is already in £32m in debt – the equivalent of £1,000 on the bills of every average Band D property in the South Hams.

Yet that local authority has just voted to increase its debt even further by borrowing £25m to invest in a property portfolio it hopes with bring in a “bail-out” income.

However, councillors were also warned that West Devon is in such a dire straits financially that it is likely to collapse within the next four years – and South Hams would be forced by the Government to bail it out in any event.

But Liberal Democrat Julian Brazil, who voted to drop the whole idea, warned that South Hams taxpayers would be hit by “huge tax increase to bail out West Devon” and likened it UK taxpayers being told to take a 50 per cent rise in income tax to bail out Greece.

“We will be paying to wrap a giant albatross around our necks,” he told councillors.

But Cllr Nicky Hopwood said South Hams had been happy to save millions of pounds by sharing officers and services with West Devon over the last decade and was now so “entwined” with the neighbouring local authority it now had “no choice” but to press ahead with the merger.

Tory councillor Trevor Pennington put forward the defeated amendment that the consultation should include a district-wide referendum as he protested the merger would herald the “demise” of second-tier local government in the area and was “undemocratic”.

His amendment was defeated by an overwhelming 23 votes to two.

No mention was made of what would happen to both authorities council headquarters at Follaton House in Totnes and Kilworthy Park in Tavistock.

A report that went before councillors said the options available ranged from letting out the offices, seeing them sold, redeveloped or remaining as they are now.

Council leader John Tucker told the meeting that the consultation process would involve town and parish councils, the public generally, Devon County Council, businesses and MPs Sarah Wollaston and Gary Streeter.

Deputy leader Simon Wright warned the Government was removing the rate support grant and there was no certainty over business rate retention, new homes bonus and sparcity payments vital to council income outside of council tax which is already capped.

“We have probably removed all the fat that we can possibly remove and we have to look elsewhere to meet this budget gap. This is one opportunity. It will not fill the gap but it is one opportunity that will help,” he said.

But Totnes district councillor John Birch warned: “We will be asking council taxpayers to pay millions of pounds to rescue West Devon.

“I was not elected to impose a massive council tax increase to save an ailing council.”

Tory councillor Judith Pearce, who was the only councillor to abstain in the vote, protested it was not being made clear the need to equalise council tax between the town councils could only be done by pushing the South Hams tax bill upwards.

She also pointed to the massive debt that West Devon was already stuck with and accused the council of being “irresponsible” in voting to borrow even more before the South Hams Council had even considered the merger consultation.

“It means that if the councils do merge the responsibility to pay this money back will lie with us because West Devon has no way of paying it back,” she warned.

The vote went:

In favour: Kathy Cuthbert, Michael Hicks, Hilary Bastone, Ian Blackler, Daniel Brown, Basil Cane, Richard Foss, Rufus Gilbert, John Green, Jonathan Hawkins, Bill Hitchins, Thomas Holway, Nicky Hopwood, David May, Karen Pringle, Rosemary Rowe, David Saltern, Peter Smerdon, Robert Steer, John Tucker, Keith Wingate, Simon Wright.

Against: Keith Baldry, John Birch, Ian Bramble, Julian Brazil, Jacqi Hodgson, Elizabeth Huntley, Trevor Pennington and Robert Vint.

Abstention: Judy Pearce.