A COUNCIL hopes to reduce the loss made by its controversial £14m theatre by setting up a new management system.

Durham City Council is examining the most cost-effective way of running the Gala Theatre to ensure the least strain on the public purse.

The theatre, built by the previous Labour administration, partly with Millennium Commission money, made a £900,000 loss last year.

Before Labour lost control of the council in May to the Liberal Democrats, it estimated the venue would need a £400,000 subsidy, but the real sum needed is expected to be higher.

The council leader, Councillor Sue Pitts, has pledged that the theatre's financial position will be made public at a cabinet meeting on Monday.

An executive board could be set up to run it following the early retirement on medical grounds of council chief executive Colin Shearsmith, 56.

Mr Shearsmith, the driving force behind the theatre's creation, took over its management after the firm hired to run it, Entertainment Team (Durham), collapsed with debts of £700,000.

The departure of Mr Shearsmith was announced on Tuesday.

In a statement, he said the pressures of the job were affecting his health.

The move followed last week's announcement of an investigation into a late-night Halloween staff party at the theatre.

Detectives are still deciding whether allegations made by the former directors of the Entertainment Team (Durham), about the council's handling of its contract, warrant a formal investigation.

The party probe is almost finished and is believed to have found that the party was authorised, but found no evidence of a woman collapsing after taking drugs.

Concern is centering on someone allegedly sleeping in the venue in breach of its insurance terms.