MALVERN Theatres is likely to lose £40,000 of grant funding in the coming financial year as Malvern Hills District Council sets new priorities for how it spends its money.

The council is proposing to reduce its revenue grant to the theatres from £190,000 to £150,000 in 2008/09.

The buildings are owned by the council, which is also planning to provide a capital grant of £50,000 for repairs, an extended lease until 2058 and free rent. It also wants to introduce a profit-sharing scheme so that if the theatres become more successful a proportion of the profits will go back to the council.

Top film and TV stars including Charlton Heston, Richard Dreyfuss, Donald Sutherland, Dame Helen Mirren, Sir Derek Jacobi, Timothy West, Raquel Welch, Sian Phillips, Stephanie Cole and Felicity Kendal have performed at the theatres in the past 10 years.

The proposed new funding structure will last for three years and is going to the council's executive committee for a decision tonight.

Malvern Theatres is run by a charitable trust, which was created in 1995, and at that stage the council provided an annual revenue grant of £300,000 - reducing by five per cent each year until 1999/2000.

Malvern Hills District Council leader Serena Croad said: "It is not an easy thing to reduce a theatre grant. Malvern Theatres is a wonderful theatre and we have great names performing and we have first class shows.

"As a small district council the funding levels over the last 10 or 11 years have been pushing us to our limit."

She said the council was getting a one per cent increase in its funding for 2008/09 and supporting the arts would not be the priority it once was.

"Support for the arts has been significant over the past 10 years but they have been identified as a non priority now. The money we save will go towards economic prosperity, planning for the future, children and young people and managing waste.

"We are not putting the theatres in any jeopardy at all. We have negotiated with them. We need to maintain the theatres without crippling the purse of the district council."

Malvern Theatres marketing director Fred Moroni said: "The funding agreement between Malvern Theatres and Malvern Hills District Council is currently under negotiation.

"It would therefore be inappropriate to make formal comment at this stage."