FROM outside, Auckland Castle, in the County Durham market town of Bishop Auckland, appears to offer palatial living to the Bishop of Durham, the Right Reverend Tom Wright.

But inside it is far from just a lavish home for the bishop and his wife.

It provides offices for more than 20 staff supporting the diocese of Durham and a thriving business which makes use of the grand setting by hosting corporate and social events.

The Church Commissioners, responsible for the Church of England's finances, are working with all bishops to explore income-generating possibilities of their homes.

While many bishops' homes have been replaced with modest pads, those in historic houses have been reduced to a unit or flat and spare accommodation is let out.

At Auckland Castle, Bishop Wright's neighbours include the diocese office, registry and the bishop's office. Between them, they support the whole diocese, which has 270 parishes stretching from the Tyne to the Tees.

For almost a decade, most of the building has been occupied by management company Auckland Castle Enterprises Limited (Ace).

Managing director Bill Hurworth said: "The days of a bishop walking around a massive palace as he wishes are gone. Instead, the bishop and his family have an apartment within the castle's south wing, with five bedrooms and four reception rooms."

The company hosts corporate events, from conferences to team-building exercises, weddings and receptions, concerts and dinner parties.

The success of the initiative has generated a £250,000 turn-over, which saves the Church Commissioners about £40,000 a year.

Castle manager Kim Fryer said: "This is very much a working castle with several occupants who all contribute rent. Tourism is important, to attract people to the area and share the castle's heritage.

"On average 2,500 people a year come just to see the castle, while commercially we get around 10,000 visitors.

"Bishop Auckland Music Society rents the throne room for concerts and we're starting to hold our own concerts and banquets.

"We're becoming more popular for weddings and receptions, and we're always looking for new events to bring in new audiences.

"The more we raise the castle's profile, the more business we attract, the more money we make to go back into the church and local community."

The way the castle is being run has been praised in Lord Mellows' 2002 report, Resourcing Archbishops, and Mr Hurworth believes it could act as a model example of how other episcopal homes could be run.

Bishop Wright said: "This is a wonderful place to live, my family is very lucky. Basically we have a medium to large family home within Auckland Castle, which I see as a village which works very well.

"Most historic houses do a bit of money-making because there is always maintenance to be done somewhere, on the stonework or on the roof.

"So to have Ace making a substantial contribution towards that means we are not just sitting here letting other people pay for us."