A bank account set up 90 years ago by a mystery donor to pay off the national debt is at the centre of a court battle, as the Government seeks permission to unlock its £400 million funds.

Nearly a century on from the fund being set up, the identity of the donor remains unknown and the fund untouched by the Government because of a quirk in the terms governing the money's release.

The terms of the bequest stipulated that it should be only used to pay off the entire national debt. However, despite growing 800-fold in value since the original £500,000 donation, the fund has never been sufficient to clear all of the nation's debt so has remained locked in the specially created National Fund.

Jeremy Wright QC, the Attorney General, has applied to the High Court to ask for the terms of the trust to be amended so that the money can be released and “used to benefit the nation”.

The value of the fund has never grown above 0.066 per cent of the national debt - which currently stands at £1.7 trillion - however the Charity Commission and trustees are keen to see the money used.