AN inquiry was under way last night into the running of a North-East theatre which, despite a troubled start appeared to be back on track.

In a surprise announcement, Durham City Council deputy chief executive Brian Spears revealed an internal investigation had begun into "inappropriate uses of the Gala Theatre Complex".

It was only weeks after the Queen officially opened the centre in May last year that the company running the venture, Entertainment Team (Durham), went into liquidation with debts of about £700,000.

In the wake of the crisis, the city council took over the running of the theatre but had to backtrack on its initial pledge that the venture would not cost local taxpayers a penny.

Over the 18 months the council has been at the helm, attendances have improved, and it appeared that the local authority had succeeded in reversing the Gala's fortunes.

But at 5.45pm last night, without prior warning, Mr Spears announced the launch of the inquiry.

He said the investigation coincided with the commencement of an indepth evaluation into available options for the complex's future management.

The study will focus on the day-to-day management, programming and future use of the theatre.

City Council leader Councillor Sue Pitts, whose Liberal Democrat party took control of the authority after the May elections, said last night: "We continue to look at all options for the future operation of the Gala.

"Our intention has always been to provide what the public want from a local theatre but this has to be within affordable limits.

"I am aware that allegations have been made concerning inappropriate uses of parts of the complex and I have instigated an immediate and thorough internal investigation."

She added: "The Liberal Democrats were elected on a mandate of openness and transparency and if any irregularities are found we will not hesitate to take the necessary action."

Last night, Councillor David Bell, the leader of the opposition Labour group, was seeking clarification over the surprise move. He had no knowledge of the inquiry.