Councillors have effectively thrown out a hugely unpopular plan to build a hotel on Abbey Rise car park in the centre of Tavistock.

There were cheers from members of the public as West Devon Borough Council unanimously voted against borrowing millions of pounds to build a hotel to be leased to a national budget hotel chain over 25 years.

The decision at the full council meeting on Tuesday afternoon cuts off finance for the scheme approved in principle by a senior council officer under delegated authority from a small group of councillors led by council leader Philip Sanders. More than 2,000 people signed a petition against the proposal and opponents crammed into the council chamber at Kilworthy Park to hear councillors speak out against the scheme, saying it would ‘harm not help’ Tavistock.

All 27 members of the council present voted against borrowing the money for the proposal, including leader Cllr Philip Sanders who spearheaded the idea in the first place.

Councillors also unanimously rejected borrowing public money to finance another plan to demolish the public toilets in Market Street, Okehampton, move the taxi rank beside them and build a retail pod/ coffee takeaway franchise in their place.

Cllr Graham Parker said: ‘I’m essentially against development that will harm the place where is it located and I’m worried that the hotel falls firmly in that category. It will harm not help Tavistock.

‘We are guardians of Tavistock’s heritage. This would be an abuse of the town’s heritage.’

Cllr Terry Pearce said it was ‘bonkers’ to suggest the town could afford to lose the 56 parking spaces at Abbey Rise.

‘I will not be supporting this proposal because it will be devastating to Tavistock,’ he said. ‘We have got to look at providing more parking for the town if this is going to be a holiday area.’

All councillors criticised the way the decision had been taken without informing anyone, including many of the councillors themselves.

Tavistock’s Cllr Debo Sellis said: ‘It is really important that we learn from this experience. We have got to involve the business community.’

Cllr Sanders said he bowed to the strength of opposition.

He added though: ‘I have concerns from a lot of correspondence that a lot of people think there are other things this council can do in the town but in fact we can’t.

‘We have looked at a lot of things but most are not financially viable. Affordable housing, in terms of being financially viable, is borderline at best. And some people have said we should be building a health centre but we can’t. It has to be built by the health authority.’

The retail pod plan for Okehampton was also rejected by the Okehampton’s borough councillors as likely to harm the community.

Okehampton Town Council offered to take on the Market Street toilets from the start of April but was overruled by WDBC, who instead propose demolishing them and moving the taxi rank to build premises for a regional coffee franchsise.

Okehampton’s Cllr Julie Yelland said: ‘In Okehampton town centre there is a huge amount of congestion and to find another place for the taxi rank that is viable would be impossible.

‘I’m also concerned about the wisdom of this council looking to fund something that even though it will fund itself, in that it won’t require council tax, would be in direct competition with existing businesses in the town.’

Cllr Kevin Ball said he was concerned about moving the taxi rank from outside the supermarkets, which is currently relied on by shoppers without cars.

The council went on to vote unanimously to borrow money to build ten flats as temporary accommodation for homeless people in Tavistock and to release additional funding for this from council reserves and Section 106 money from developers.

Cllr Sellis said: ‘I wholeheartedly support borrowing for this as there is severe deprivation in Tavistock. If we can effectively accommodate some very vulnerable people that is excellent.’

The council came up with the controverial scheme for the hotel as part of efforts to plug a massive budget shortfall caused by the withdrawal of Government funding from local authorities

Opponents of the hotel scheme were jubilant after the meeting.

‘I’m delighted they have voted it down,’ said Emma Taynton-Young. ‘I’m glad they have seen sense.’

• The public meeting on the hotel on Monday at WDBC’s offices has now been cancelled.