A TROUBLED theatre will receive a £650,000 subsidy from its council owner.

Durham City Council is to pump the money into its flagship Gala venue, which opened in January 2002 but was dogged by problems when the firm hired to run it collapsed with debts of £700,000.

The council, now under Liberal Democrat control, hired Darlington Borough Council's arts team to run the venue for a year. Finance director Liz Hall said in her statement of accounts for the 2003/04 financial year, that the budget for the year of £395,000 'proved to be unrealistic.'

She said: "A realistic business plan was prepared targeting a £700,000 subsidy. The final subsidy was £54,000 above this plan. £24,500 of this was the unbudgeted first payment of the management fee to the arts team from Darlington Borough Council.''

In the current financial year the planned subsidy is £650,000, which the council believes is at a stable and realistic level, she said.

Carol Woods, cabinet member for finance, said: "The city council has received unexpected receipts, from fees and charges and rates refunds. Because of this, we've been able to meet both the unbudgeted costs of the Gala Theatre and increase our reserves."

But Labour councillors are angry at the way an extraordinary council meeting to agree the accounts was run.