A district councillor has moved to allay fears of a huge hike in council tax after a proposed merger with the troubled West Devon Borough Council.

Ivybridge West councillor Mike Saltern told town councillors this week the union may raise rates by just six pounds a year for the average property.

Two weeks ago South Hams District Council and WDBC agreed to go out to public consultation over a proposal for a full merger.

The proposal has been put forward to help address the combined £1.9 million black hole in the two authority’s finances after cuts by the coalition and Conservative governments since 2010. But although the two councils now share a workforce, WDBC is in a significantly worse financial situation.

During discussions on the issue, SHDC councillors were told the neighbouring authority is in debt to the tune of £32 million. There were also hints that, if they did not merge voluntarily the Department for Communities and Local Government could force SHDC to take on West Devon in the event of its financial failure.

Speaking at Monday’s meeting of Ivybridge Town Council, Cllr Saltern outlined "changes" to the proposal to merge the two councils. He said SHDC and WDBC representatives had met the DCLG and the meeting had resulted in "considerable changes" to the proposals.

He said: "Up to now the equalisation of council tax has always been looked at as taking place over five years. It was suggested by DCLG that this could be extended over a ten year period.

"This is a significant change to the whole proposal. The big worry of residents was that the increases would be large. The gap between the two is £63, and if that is equalised over 10 years, the increase due to the merger is just over £6 per year. With the normal £5 per year increase that makes £11 per year.

He added: "Members will agree, this is not the huge amount referred to in recent weeks."

Cllr Saltern also confirmed the public consultation over the plans would run from Monday, August 14 to Sunday, October 8, and would be extensive including a card being sent to every household, an online consultation, paper surveys and a phone survey.

If the decision was taken to proceed, he explained, the two councils would have to apply to the DCLG, and would need the support of Devon County Council and the four MPs covering the two authority areas. The new council would be in position by 2020, allowing time for the boundary commission to look at how to reduce the number of wards from 62 to "somewhere in the region of" 48.

Following his speech Cllr Saltern took questions from town councillors. Cllr Phillip Dredge wanted to know whether, if the public did not support the move following the consultation, that would have "a significant effect" on SHDC’s plans.

Cllr Saltern said the DCLG had stressed consultation was key.

Cllr Sylvia Rutley asked if the idea of Ivybridge coming out of SHDC’s area and joining Plymouth City Council had been part of considerations. Cllr Saltern replied he did not think Plymouth was looking to extend its boundaries.

Cllr Ray Wilson pointed out that under the plans, the merged authority would be taking more in council tax, and paying less out in running costs.

Cllr Saltern said there was a deficit that had to be "plugged", with government funding reduced by 40 per cent.

Cllr Tony Rea challenged Cllr Saltern as to whether SHDC was lobbying the Government "and making it clear, that is why we are facing these problems".

Cllr Saltern said SHDC worked through the Local Government Association to give it a "bigger voice". However, he noted that previous government plans to let local authorities keep 100 per cent of business rates to fund themselves were now up in the air, meaning uncertainty over the future of funding for councils.

Cllr Rea added: "Well, I hope that voice is being listened to."