The strange story of the £400m charity that could wind up without ever making a donation

The National Fund is 91 years old and one of the richest charities in Britain. 

It is the largest charity you have almost certainly never heard of. With assets in excess of the Nuffield Foundation or Joseph Rowntree, the National Fund is the 34th richest charity in Britain.

Established by an anonymous donor in 1927, the National Fund has grown from £500,000 to £400m today. Its income of £4.7m puts it on a par with Oxfam or Save the Children. Yet, the only ”charitable activity” listed in its 2016 accounts are £147,000 in fees for the trustees, accountants and the others who manage it.

The reason is simple. The National Fund was founded by an anonymous donor for one purpose and one purpose only: to pay off the national debt, in its entirety. The trustees have the power to pay off part of the debt if, in their opinion “national exigencies require”, but despite two world wars, they have never seen this as necessary. 

Questions have been raised about the purpose of this strange organisation since the 1930s. The Labour MP Frederick Bellenger asked in 1939 whether the deeds of the National Fund should be altered, but was told that the government could see no reason for this to be done. 

In the last few years, MPs have returned to the issue. In 2015, Nick Hurd – now Minister of State at the Home Office – asked “what progress” the Attorney General was making in discussions about the National Fund’s future. “Options are being considered for the future of the Fund, consistent with its object of extinguishing or reducing the national debt,” replied the Attorney General, Jeremy Wright. “A proposal will be set out in due course.”

It seems that nearly three years later, change is at hand. In a statement to the New Statesman, a spokesman for the trustees – Zedra Fiduciary Services – says that talks with the Charity Commission and Attorney General are still ongoing, but that “at this stage it is felt that the most likely outcome will be that the Fund will be liquidated and payment made to the National Debt Commissioners, although the timeframe for this is not known”.  At that point the charity would “cease to exist”.

In case you were wondering, the £400m in the National Funds coffers will only make a tiny dent in the public debt, which stood at £1.7trn (or £1,734.8bn) at the end of November 2017.  

Perhaps we should all be grateful that the National Fund has never achieved its goal. If it had finally managed to pay off the entire government debt, the impact would probably have been catastrophic. Government debt, or “gilts” as the individual securities are known, is the backbone of the pension industry. Extinguishing gilts would have left pension funds scrabbling around to find alternative assets to hold.

The National Debt Commissioners, to be entrusted with the National Fund’s £400m, represent another strange and venerable British institution. Established in 1808, the six Commissioners included the Bank of England Governor and his deputy, the Chancellor of the Exchequer, and the Speaker of the House of Commons.

As the official record states, meeting of the Commissioners “were at first held regularly, usually at the home of the Chancellor, but that the last recorded business meeting took place on 12 October 1860. The reason for the sudden cessation is unknown, no hint being obtainable from the minutes.” The Commissioners were reconvened in February 2016, with much the same membership (including the current Speaker, John Bercow). 

Exactly what the Debt Commissioners do is something of a mystery. As the government admits, they have “no statutory provision requiring the production of an annual report or other published information about their activities”.

Perhaps almost as odd as the soon to be extinguished National Fund.

Martin Plaut is a senior fellow at the Institute of Commonwealth Studies, University of London and author books including Understanding Eritrea and a biography of Robert Mugabe with Sue Onslow.