The decision on whether to fund a new theatre in Stratford has divided councillors.

Many questioned the logic of spending £100,000 on a feasibility study to help decide whether they should then invest a further £3m in The Red Crate, which would be built in Gerry Raffles Square.

By backing the addition to the cultural quarter, the council also could lose out on the possibility of gaining £100,000 a year in rent from a budget gym operator, which hopes to open in the area.

Meanwhile, a report prepared ahead of last Thursday’s cabinet meeting suggested that of the 30,000 estimated annual visits, just 8.931 are projected to be by Newham residents.

The 220-seat auditorium planned would be a sister building to the National Theatre’s identical building on the South Bank and is envisioned to double the Theatre Royal Stratford East’s offering.

However, it was also noted that the nearby Picturehouse, also in the Gerry Raffles Square, does not operate at full capacity, while performances at the Stratford Circus regularly run with 40 per cent of seats empty.

“Three million pounds on a box - is this the best use of council money?” Deputy Mayor Lester Hudson said. “I really don’t think so.”

Cllr Ian Corbett said: “It doesn’t make any sense to me to provide an arts centre that nobody wants.”

He noted that there are currently no shows open for booking at the South Bank space before adding: “It it doesn’t work on the South Bank, why would it work here?”

Cllr Terry Paul said: “If you gave me £4m [the total cost of the project], I would build more homes rather than give it to the National Theatre.”

But others suggested that a new theatre could strengthen the cultural offering, regenerate the area to make it more of a draw and, in turn, potentially reduce the need for council funding.

Mayor Sir Robin Wales said the area does work cohesively at the moment but a new theatre, along with more food and drink outlets, could prove the answer.

“It doesn’t work [at the moment] -it’s not attractive enough,” he said. “We could bring the venues together and reduce our costs.”

Cllrs decided to go away and reconsider their options before holding another meeting to decide how to proceed.

Theatre Royal Stratford East is seeking £3m from Newham Council and intend to raise the remaining £1.5m from a fundraising campaign.