A development in West Hampstead that business owners argue will lead to significant job losses and could cause two dozen businesses to close down has been given the go-ahead despite a last-ditch plea to the council.

Traders on the Liddell Road Industrial Estate – currently home to 24 businesses – urged councillors to review a decision taken last year to approve redevelopment of the site during a lengthy and heated meeting at Camden Town Hall on Tuesday evening.

The proposals would see the entire site bulldozed as part of an expansion of Kingsgate Primary School, in Kingsgate Road.

The council say the construction of the additional school building – set to be around half a mile away from the school – will provide “much needed” space for 420 more primary school places.

But the decision has led to serious concerns among some community groups, business associations and residents in West Hampstead.

James Earl, chairman of the West Hampstead Neighbourhood Development Forum, said to be the largest community group in the area, urged the council to “pause and reconsider”.

“We and everyone we’ve spoken to in the area strongly support the need for additional primary school places,” he said. “[But] the consultation on which this decision was made was significantly flawed and inadequate.

“Groups making responses weren’t included in the report and members of the community to the north of Liddell Road weren’t made aware of the consultation. The proposal for the redevelopment of this site is also seriously flawed.

“The Camden Local Development Framework gives protection for light industrial sites as there are so few of them in the borough.

“Not only will these valuable types of businesses be lost but hundreds of jobs and livelihoods are also forced to go.”

Business owners on the site also argued they had not been properly consulted and that the council had “misrepresented” the impact.

Branko Viric, who manages the family-run business West Hampstead Motors and has been based at the site for over 13 years, said the council had condemned businesses to the scrapheap.

“The council has effectively handed me and my staff a redundancy notice,” he said. “The proposal will lead to large job losses and a net loss of employment, not a gain as suggested by the report.

“This will result in terrible social consequences. Some of our current staff may lose their homes as a result.

“The proposal will also result in the loss of already very scarce apprenticeships.”

The project is set to provide some 120 homes – none guaranteed to be affordable housing – and could generate the council an almost £10million surplus.

Cllr John Bryant, representative for West Hampstead, said the council had “ignored the community’s pleas” and questioned the feasability of split-site school with buildings half a mile apart.

He also expressed serious concern that the money generated from the project “would not stay in West Hampstead”.

Cllr Angela Mason, cabinet member for children, said: “This is an exciting proposal to provide hundreds of community primary school places, in the area of highest demand in Camden, at no extra cost to the taxpayer.

“The new school building could be paid for with a mix of housing and business or light industrial development on the site.”