In 1928 £500,000, referred to as the "National Fund", was settled on trust to accumulate income and profits until the date fixed by the trustees as being the date when, either alone or together with other funds then available for the purpose, it was sufficient to discharge the National Debt.  At that time, the Fund was to be transferred to the National Debt Commissioners to be applied by them in reduction of the National Debt.  A special Act had been passed to permit such indefinite accumulations for that purpose.  Since 1928 the Fund has had many large and small additional gifts made to it. 

The aggregate fund has been invested and has been accumulating income for 93 year in the hands of its trustees.  The first trustee was Barings. After the collapse of Barings, Barclays became the trustee until it sold its trust business to Zedra, since when Zedra Fiduciary Services (UK) Ltd has been the trustee.  The Fund with its accumulated income is now worth about £600 million. 

In 2018 the Attorney General applied for a scheme in respect of the Fund.  In December 2020 Zacaroli J rejected claims by heirs of the original settlor that the trust was invalid.  He held that the circumstances in which the Fund might be sufficient to discharge the National Debt were so remote, that for all practical purposes there was no possibility of it ever being sufficient to discharge the National Debt (whether alone or with other funds available for the purpose).  He held that the court had jurisdiction to make a scheme under the cy-près doctrine.  He adjourned the issue of whether the National Fund should now be applied in reduction of the National Debt or should be applied for some other charitable purposes. 

The adjourned hearing took place in December 2021.  Judgment was handed down remotely on 21 January 2022.  Zacaroli J held that the Fund should be applied in reduction of the National Debt.  He held that the first two of the three factors to which s.67 Charities Act 2011 required him to have regard, that is to say “the spirit of the gift” and “the desirability of securing that the property is applied for charitable purposes which are close to the original purposes”, pointed in favour of that conclusion.  Zacaroli J found that the third factor, that is “the need for the relevant charity to have purposes which are suitable and effective in the light of current social and economic circumstances” was more difficult, but concluded that taking account of current social and economic circumstances did not point sufficiently in favour of the trustee’s scheme to cause it to be appropriate for purposes of the fund to be altered so that it became held on trust for general charitable purposes.  

William Henderson acted for the Attorney General.

Please click here for the judgment.