THE chairman of Malvern Theatres Trust, Clive Richards, put its problems firmly down to the withdrawal of a key subsidy from Malvern Hills District Council.

Speaking during the question and answer session he said that while capital overspend and the cutting of the revenue grant had proved principle issues it was the latter that had been the overriding issue.

"I have no doubt that the revenue grant is at the core of the problems we are now facing," said Mr Richards.

"If it's the Ambassador Theatre Group or anybody else they are not going to come in on zero revenue grant when all the other theatres they manage have a revenue grant.

"Any commercial operator is here to make a profit and in the event that he doesn't he will give the lease up and you will find yourself back to square one. We are here as a trust, a not-for-profit organisation. We can make a surplus if we get a proper revenue grant but it is more difficult if it is cut by over £100,000 in the space of four years."

Mr Richards said had it not been dropped the trust would have shown a £157,000 profit.

He added that the solution would be if the grant was reinstated and a profit-sharing proposal could be adopted, the council gaining financially from the venue's success.

The idea, he said, had been put to the council on several occasions but had been turned down.

He had earlier said problems began with a £560,000 deficit from refurbishment of the theatres in 1997.

He said estimates of the cost were overtaken by an upturn in the building industry, accounting for around £400,000, and that the fly tower had also cost around £160,000 more than anticipated.

He said the trust felt it had no option but to explore ways of finding money to clear the debt and made the initial approach to ATG to explore commercial takeover.