by political editor Paul Francis

A spending watchdog says it is prepared to drop a claim Kent County Council was negligent over its £50million deposited in Icelandic banks.

The Audit Commission has come under pressure from the authority since publishing a report that said KCC and six other authorities were negligent over the deposits made in the banks. The council had threatened to take the Commission to court to force it to retract the charge.

That prospect appears to have receded after the Commission offered to remove the charge of negligence. It has now indicated in a letter it is prepared to accept KCC's argument that its actions over the deposits should be described as "carelessness".

However, the Commission says it maintain that KCC, along with six others, missed important warning signs about the state of the Icelandic economy that others had spotted and acted on.

In a proposed amendment to its original report, the Commission states: "There is no escaping the simple fact that £32.8million of public money is now at risk and it would not be if those authorities had not missed the warning signals, which in the Commission's view, they should have seen."

In relation to KCC, the Commission has proposed the new report will now drop the word negligenct and say: "[it] has accepted its policy was breached...it claims that there was a human error and its actions can properly be described as carelessness."

Cllr Nick Chard (Con), KCC's cabinet member for finance, said: "I am pleased it has agreed to change the word 'negligent'. We thought it was inappropriate and had legal connotations we considered unfair. We made our views known and it agrees with our position."

Meanwhile, a furious political row broke out at County Hall on Thursday as the opposition Labour group unsuccessfully tabled a vote of no confidence in Conservative council leader Paul Carter over the Icelandic cash.

During an ill-tempered debate, Labour leader Cllr Mike Eddy said whatever words the Audit Commission had used "there was no escaping the fact that money was wasted".

He also questioned why councillors had not been told of the Commission's proposals set out in a letter sent to the council two weeks ago.

Deputy Labour leader Cllr Derek Smyth said: "Public confidence in KCC has been undermined and the only way it can be restored is if Paul Carter is dismissed from office."

But Conservatives rounded on Labour, with deputy leader Cllr Alex King accusing it of electioneering and "bringing the shabby politics of Downing Street into Kent".

Liberal Democrat leader Cllr Trudy Dean accused both Labour and the Conservatives of playing political games and said the vote of no confidence was a waste of time.

"Outside County Hall, council taxpayers are looking at the almost certain loss of £10million of council taxpayers' money and all we can do is play games," she said.