THE story of Durham's flagship Gala Theatre has provided as much drama as any production staged in its main auditorium in its short life span.

Universally acknowledged as an excellent small-to-mid range venue, it has suffered the same problem as many such ventures down the years, day-to-day funding.

The £14m Millennium Commission-backed development has endured many lows and too few highs since it got off to a less-than-auspicious opening in January last year.

The cancellation of a planned performance by boy band A1, and poor sales of tickets to see Westlife caused an initial drain on resources.

Only two weeks after the pomp of the Queen's official opening in May last year as part of her Golden Jubilee tour, the management company running the Gala, The Entertainment Team (Durham), ceased trading.

It emerged that its debts were in the region of £700,000, with many small community organisations among the creditors.

Durham City Council, which had appointed The Entertainment Team, took up the running of the theatre, initially for 13 weeks while it considered options.

The council has continued to run the theatre, but by early this year, it had to concede that taxpayers' money would have to be used to fund the theatre.

Reported first-year losses were believed to be in the region of £900,000, and although attendances have picked up, it emerged last week that the financial situation was bleak.

A change at the helm of the city council has done little to improve the finances at the Gala.

The Liberal Democrats swept to power in the city council elections in May, having criticised the "fiasco" over which the previous Labour regime had presided at the Gala.

But more than eight months into its first stint in power, the Lib-Dems have found it equally difficult to balance the books, despite much popular acclaim for a lot of the fare on stage.

Revealing losses of £445,733 from April to October, £157,530 over the budget of the previous administration, Durham's Labour MP Gerry Steinberg said he feared for the future of the theatre.

He said: "Had Lib-Dem members been more supportive of this wonderful scheme from its inception, instead of trying to undermine it at every opportunity, then perhaps they might not now be presiding over such a mess.

"Their attitude has come home to roost."

He said that only a subsidy of £800,000 a year, a sixth of the council's annual budget, could subsidise the theatre.

But council leader Sue Pitts hit back, citing more favourable financial figures during the Lib-Dem's tenure.

She said: "The projected subsidy for this year will be at least 25 per cent lower than last.

"The target set in April of this year has proved unrealistic for a new theatre, although it should be achievable in future years.

"I am confident the whole of the Gala complex will continue to develop so that the subsidy will reduce to a realistic one."

Andrew Dixon, executive director of the Arts Council England North-East, described the Gala as a fantastic theatre and said it was a great venue for quality arts.

Yesterday, he called for a broad business plan to be devised to win public, private and community support.

He said: "Given Durham's importance as a centre for cultural education and tourism, it has the potential to shake off its early problems and take an important place in the city and region."