The Arts Council has responded to the controversy over the running of the Abbey Theatre under its new directors by withholding €300,000 in funding, pending proof of employment opportunities for Irish based artists.

On Monday it emerged that a number of theatre practitioners signed a letter addressed to Minister Josepha Madigan that expressed dissatisfaction with the way the theatre has been run under directors Neil Murray and Graham McLaren, appointed in 2016.

Specifically, it raised concern over the number of international and co-productions that have been put on stage since the directors were appointed which has caused reduced opportunities for Irish based artists, leading to lower rates of pay and shorter employment contracts for freelance theatre professionals which have been "cast adrift".

The group, including high profile actors Ruth Negga and Aiden Gillen, claimed that the practice of fewer in-house productions and increased co-presentations had caused "devastation" for Irish-based artists.

"There will not have been an Ireland-based actor in an Abbey Theatre production on an Abbey stage since Jimmy’s Hall ended on 8 September 2018 until The Country Girls opens on 23 February 2019" the letter stated.

"The numbers are stark and are worth stating. In 2016 the Abbey directly employed 123 actors in Abbey productions and 90 actors in readings and workshops. Then, in 2017 the Abbey directly employed only 56 actors. No figures are available for readings or workshops that year. Fifty six. That is a reduction of 54% of actors appearing on stage directly employed by our National Theatre."

In response to these concerns, the Arts Council said that the Abbey Theatre is required to provide evidence of the nature of employment opportunities for artists and that "€300,000 has been withheld pending confirmation that these conditions have been met".

The Abbey Theatre released a statement on Monday in which it said it is taking the issues raised "very seriously".

However, further dispute has been caused by the financial situation of the theatre, which was highlighted in its response.

The theatre stated that “the financial position inherited by the current directors is also worth noting. In the two years prior to their inaugural 2017 programme, the Abbey Theatre had incurred an accumulated deficit of €1.4 million. These losses were incurred by the programming model that the signatories’ letter appears to advocate – a predominance of large-scale Abbey Theatre self-produced shows with little access for smaller independent companies and artists.”

However, it since emerged that the Abbey had a surplus of €500,000 on the balance sheet for 2016.

The Abbey subsequently stated there was "no overall deficit" but in 2015 and 2016 the programme of activity operated at a loss which was covered by previous reserves.

In a statement issued to The Irish Times the addressee of the initial letter, Minister Josepha Madigan, outlined her current position, stating, “I understand that The Abbey will be engaging directly on the matters raised in the letter with representatives of the signatories. I welcome that commitment to dialogue and engagement and look forward to a mutually satisfactory outcome.”