The Royal Hall was opened in 1903

The Heritage Lottery Fund (HLF) says it will put in �6m if the council raises its contribution from �2m to �2.6m.

Harrogate Borough Council leader Mike Gardner says the authority cannot afford the extra �600,000 and HLF is "totally out of touch with reality".

HLF said it was "committed to finding a solution for the hall".

'Unfair treatment'

Mr Gardner remained unconvinced, saying: "I do not think they want to support this scheme any longer. I think they want a way out."

A deadline of 30 April for the council to agree to HLF's conditions has passed but discussions with the fund were "still ongoing", said Mr Gardner.

He warned that if HLF did not agree to go ahead with restoration of the 101-year-old Grade II-listed theatre, the council would refer the matter to Culture Secretary Tessa Jowell.

"We think we are being treated unfairly and if we don't get a satisfactory outcome we will not hesitate to go to the Secretary of State," said Mr Gardner

I don't think they understand how local authority finances work Harrogate council leader, Mike Gardner

He accused HLF, which he described as a government-controlled quango, of being politically biased against Harrogate.

"How can they agree to put only �6m towards this project when they are putting �19m into a new art gallery in Leeds, a city with a budget 30 times bigger than ours?

"Coming to us and asking for another �600,000 is like asking Leeds for �18m.

"I don't think they understand how local authority finances work."

The council had initially agreed to put in �2.6m on top of HLF's �6m offer when the plan had been for a full restoration of the hall costing around �14m.

But when it proved impossible to raise the remaining �5.4m, the scheme was downgraded to a partial restoration - covering just essential structural work - at a cost of �10.5m.

'Much-loved building'

As a result, the council decided to reduce its share of the new scheme to �2m.

"HLF are insisting we still put in the �2.6m which we had only put aside for a full restoration," said Mr Gardner. "How can they justify that?"

An HLF spokeswoman said it was only asking the council to stick to its original offer to contribute �2.6m.

"The Heritage Lottery Fund has always recognised the importance of the Royal Hall as a much-loved public building which should be contributing to local life at the heart of the town," she added.

"We have been committed to finding a solution for the hall within the budget available.

"We are disappointed that the council have not yet been able to take up our grant offer but are expecting further discussions with them in the coming days."