Government asks permission to use £475m fund proposed for charities to pay down national debt instead

90-year-old fund was meant to help pay off UK's liabilities but trustees have previously proposed giving it to charitable causes

The government has asked the High Court to allow the National Fund to be released (Getty)

The government has applied for a pot of money earmarked to be given to British charities to instead be used to help pay off the national debt.

The attorney general, Jeremy Wright, asked the High Court to approve the release of the £475m National Fund to the Treasury.

The fund's trustees previously applied for permission to donate the money to charities, but Mr Wright said it should instead be used to help reduce government debt.

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The National Fund was created in 1928 after an anonymous donor gave £500,000 with instructions that it should be used to create a reserve to allow the UK's debts to be paid off in one go.

Despite now being worth £475m, however, the pot has never amounted to more than 0.066% of the national debt and has therefore remained unused.

The fund's trustees applied to the Charity Commission for permission to use the money for a series of grants to charities in the UK.

The Commission referred the matter to the attorney general's office in 2011, saying it was for the government to decide, but no decision was made.

Mr Wright has now decided the money should instead be given to the government to pay down the national debt.

He 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 fund was established after future prime minister Stanley Baldwin, then the financial secretary to the Treasury, used an unattributed newspaper article to announce he had donated a fifth of his wealth to the Exchequer and call on others to do the same. At the time Britain's national debt had hit 150 per cent as it struggled to pay the costs of the First World War.

The current national debt stands at £1.7tn, meaning the National Fund money would reduce Britain's liabilities by just 0.025 per cent.

Labour said the money should instead be given to charities.

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.”

The government said it had sought the trustees' approval to apply for the money to be released. It is not clear whether this was received.