The £500m charity set up to pay off the national debt could legally be disbanded to put the money to good use, a High Court judge has ruled.
The National Fund charity was established in 1928 with £500,000, with the intention that the money should be released only when the government was in the position to use it to pay off the entire national debt.
The charity’s funds have since grown to £500m, but the UK's national debt is approaching £2tn.
In a judgment published yesterday, Justice Antony Zacaroli ruled that the charity was a valid charitable trust, but the value of the funds it held would account for only about 0.026 per cent of the national debt.
He said that while it was not technically impossible that its purpose of paying off the national debt could ever be fulfilled, the chances were so “vanishingly small” that it was practically impossible.
He also ruled that because the charity’s founding purpose could not be fulfilled, the court was legally able to create a cy-près scheme – an order that allows the money from the charity to be used for a purpose that is different to its original purpose, although very similar.
The legal case was brought in 2018 by the then-Attorney General, Jeremy Wright, who argued the money could be used to reduce the national debt.
The judgment acknowledged one option could be to transfer the money to the National Debt Commissioners to use it to pay off the small amount of the debt it was able to – but over the years there have been calls for it to be used for other charitable purposes.
The most recent of these was made by Danny Kruger, the Conservative MP for Devizes, in his recently published review of the role of the voluntary sector during the pandemic. His report called for the government make money from the National Fund available as emergency funds to support the voluntary sector and create a longer-term £2bn endowment to support disadvantaged communities.
The question of whether the court should make a cy-près scheme, and if so, what the money should be used for, will be decided at a subsequent hearing, the judgment said.
The court documents also revealed the name of the charity’s founder for the first time.
Gaspard Farrer was a partner in bank and investment management company Barings until he retired in 1925. He anonymously contributed the £500,000 to establish the fund in 1928, with Barings as the initial trustee.
There have been further contributions to the National Fund, the biggest being more than £400,000 bequeathed by Lord Dalziel of Kirkcaldy in 1935. No contributions have been made since 1982, the documents said.