'Unwelcome' proposals for a local authority covering the whole of North Staffordshire have been condemned by one of the area's existing council leaders.

Stoke-on-Trent City Council has announced its support for a new unitary authority covering Stoke-on-Trent, Newcastle-under-Lyme and the Staffordshire Moorlands, in response to the government's planned reorganisation of local councils.

City council leaders say a North Staffordshire council makes 'perfect economic sense' and would make local government in the area more efficient. But Simon Tagg, the Conservative leader of Newcastle-under-Lyme Borough Council, believes the proposals will 'send shivers down the spine' of taxpayers in Newcastle and the Moorlands – suggesting they will be expected to 'bail out' cash-strapped services in Stoke-on-Trent.

The government announced in December that it planned to replace two-tier local government in England with a single layer of unitary councils, each with a minimum population of 500,000. Councils in the affected areas, including Staffordshire, have been given until March 21 to come up with interim proposals for the new unitaries.

The city council has published a report setting out its 'negotiating position' of supporting a North Staffordshire authority, as talks between the Staffordshire councils continue. But Cllr Tagg has been quick to reject the city council's proposals, arguing a 'remote super council' will not benefit residents in Newcastle or Stoke-on-Trent.

He said: "This unilateral proposal by Stoke-on-Trent City Council is unwelcome and it is noticeably lacking in detail. Newcastle-under-Lyme Borough Council is debt-free and delivers key local services at the local level for its residents, delivering them at low cost while overseeing once-in-a-generation town centre regeneration, job creation projects and fighting Walleys Quarry on behalf of residents."

"Stoke-on-Trent City Council is in debt, threatening legal action against its schools and is only just regaining control of its children's services after six years of Government supervision. I would suggest an expensive, time-consuming reorganisation is the last thing it – and communities across Stoke-on-Trent– need."

"We here in Newcastle believe frontline services should be delivered as locally, cheaply and efficiently as possible, rather than through more remote super-councils which would see the scrapping of our historic borough.

"The city council cabinet's report uses the phrase 'rebalancing the financial base' to help bail out the city council using Newcastle borough and Moorlands tax payers, which will send shivers down the spine of local residents in both areas."

Labour-run Stoke-on-Trent City Council is already a unitary authority, responsible for all local authority services in the Potteries. In the rest of Staffordshire, the bulk of local services – including social care and highways – are delivered by Staffordshire County Council, while services such as waste collection, planning and leisure are the domain of the district and borough councils.

The government has said that it expects all the councils in Staffordshire, including Stoke-on-Trent, to make every effort to agree one set of proposals for unitarisation – although the interim submission due by March 21 can include more than one option.

District councillors in the Staffordshire Moorlands will consider a number proposals at a special meeting on March 5. Labour council leader Mike Gledhill believes it is important that local authorities in Staffordshire engage in the reorganisation process.

He said: "The reorganisation is going to happen – governments don't tend to back down on big decisions like this. We can protest about what's happening and stick our heads in the sand, but I think it would be a dereliction of duty if we don't work to get the best deal for people in the Staffordshire Moorlands.

"This isn't about what's happening today, or next month, or next year – it's about the long-term future of the area. People can get hung up about unitary councils, but I think that if an area has good councillors, it will have a good council."

Staffordshire County Council is set to reveal its own proposals for reorganisation soon, ahead of a special cabinet meeting next month. Council leader Alan White acknowledged the proposal from Stoke-on-Trent, but insisted that things were still at an 'early stage'.

He said: "The government has been very clear with what it is expecting from local government reorganisation. No proposal for Staffordshire and Stoke-on-Trent has been agreed at this early stage, so it is right that these outline proposals are considered thoroughly and openly as part of the democratic process.

"Our proposal will also be considered at a meeting of Staffordshire County Council's cabinet and at a meeting of full council before submitting to the government in March. As we work through the process of change – something that is likely to take a number of years – our top priority is to maximise the benefits for Staffordshire's residents and businesses and ensure vital council services are not disrupted."

Staffordshire Leaders Board, made up of the leaders of the county's 10 councils, is scheduled to meet on March 6, with devolution and local government reorganisation likely to be on the agenda.