The UK’s national debt has quietly shrunk by millions of pounds after an unexpected move by a little-known government body.
The Commissioners for the Reduction of the National Debt took a large private donation, invested it in a government bond, and then canceled the corresponding debt, shaving a small amount off Britain’s nearly 3 trillion euro debt pile, a Bloomberg report said on Thursday.
This unusual step highlights a rare overlap between old-world philanthropy and today’s fiscal policy. It shows that even centuries-old financial tools can still play a role in modern debt management.
At the same time, it serves as a reminder that charitable donations, while symbolic, can only make a tiny dent in the vast scale of government borrowing.
Nature of National Fund
The source of this action was the National Fund, a charitable trust set up in 1928 with a £500,000 donation from the anonymous philanthropist Gaspard Farrer, then a partner at Barings Bank.
The original intention, inspired by post-WWI patriotism and calls for wealthy Britons to help reduce the wartime national debt, was for the fund to grow, through further donations and investment returns, until it alone could fully repay the UK’s national debt.
By 1989, the fund had reached nearly 70 million euros; by 2022, it stood at around 590 million euros.
UK’s soaring debt
The fund was set up with a lofty ambition: its money could only be used if it was enough to clear the entire national debt in one go.
But as the UK’s debt soared over the years, that goal became impossible to meet.
By 2019, when the debt had climbed past 1.8 trillion euros, the fund’s value was less than 0.03 percent of what was needed.
Eventually, the government acknowledged that without some extraordinary new donations, the fund’s original purpose would never be fulfilled.
In 2018, the Attorney General turned to the High Court to ask for a change in the fund’s rules, relying on the cy-près doctrine, a legal principle that lets charitable trusts adjust their goals if the original ones become unworkable.
There was some legal back-and-forth along the way, with descendants of the original donor even trying to claim the money for themselves if the trust was deemed invalid.
But in 2023, the court gave the green light to the government’s plan, allowing the fund to be used straight away to help reduce the national debt.
How will it work?
In 2025, the CRND put the National Fund, then valued at around 586 million euros, to work by buying UK government bonds set to mature that October.
Instead of waiting to redeem them, the bonds will be canceled outright, which means the overall debt burden is reduced directly, even if only by a small amount.
It’s a legally straightforward move, but also a symbolic one; the money earmarked for cutting debt is finally being used exactly as intended, in a clear and transparent way.
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