The attorney general has applied to the high court to release at least £400m from a fund that has in effect been frozen, in order to reduce the UK’s massive national debt.

The legal manoeuvre was launched by Jeremy Wright QC following criticism over delays about what to do with the National Fund, which was established in 1928 with the aim of paying off the country’s accumulated financial liabilities.

The account was created when an anonymous donor supplied £500,000 – a decade after Stanley Baldwin appealed to citizens to help pay the country’s war debts – with a mandate to build an endowment large enough to pay off all the money the UK owed in one go.

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With Britain’s national debt at £1.7tn, however, the fund’s trustees concluded nine years ago that there was no prospect of cancelling it and applied to the Charity Commission to change its constitution so it could donate money to charities around the UK.

Labour, which estimates that the fund is now worth £475m, supports the call for the money to be redirected to charity, but Wright wants it to go to the original cause.



The fund has never grown above 0.066% of the national debt and has in effect been stuck in legal limbo since its establishment.

The attorney general’s office argues that it has a duty to adhere as closely as possible to the original purpose of the fund in order to respect the wishes of those who have contributed to it.

Deviating from the donors’ wishes would set a precedent that might discourage future donors if they believed the aims of their original gifts could be changed retrospectively.

The attorney general said: “Almost 90 years ago, an anonymous donor bequeathed money to the nation and yet we have not been able to put it to good use. We have been working with the Treasury, trustees and the Charity Commission to find a solution consistent with the donor’s original objectives of extinguishing the national debt.

“I am applying to the high court to ask that the fund is released and, if that application is successful, the fund could be used to benefit the nation by helping to do what the original donors intended.”

The minister has sought the approval of the trustees to enable the terms of the charity to be amended so the money can be released. He will apply for the money to go towards the reduction of the national debt in accordance with the fund’s original intention.

But Steve Reed, the shadow minister for civil society, said: “This £475m would be a tidal wave of support for small charities, but it’s a drop in the ocean compared to the national debt. In fact, the national debt is rising so fast that by the end of the same day this payment is made towards it, the debt will have risen by nearly the same amount.

“This government never misses a chance to sideline charities. Here’s a real chance to do some real good but the government is threatening to do nothing instead.”