The UK’s national debt will be marginally reduced by a High Court ruling on charity law today. In HM Attorney General v Zedra Fiduciary Services, Mr Justice Zacaroli approved an application by the attorney general for a cy-près (‘as near as possible’) scheme to vary the terms of a £600m charitable trust whose original purpose cannot be fulfilled.
The so-called National Fund had accumulated since 1927 following an offer by a then-anonymous donor to the government of £500,000 for redemption of the national debt. It was accepted by Winston Churchill, then chancellor of the exchequer in Stanley Baldwin's Conservative government. Churchill announced that the donor's 'clear-sighted patriotism' would contribute to the 'ultimate - though yet distant - extinction of the public debt'.
Far from extinction, the national debt now stands at around £2.3 trillion; the court heard that the fund would allow the government to save £5.6m in annual interest payments - 0.0006% of government spending.
Ruling against a proposal by Zedra, the current trustee, for the fund to be transferred to a new ongoing fund for charitable purposes, the judge stressed that it was not his function to decide what would be the best use of the money. Rather, he was ruling on which of the competing proposals met the requirements of the Charities Act 2011 which confers powers on the court to apply cy-près top fulfil 'the spirit of the gift'. He observed that any donation to reduce the burden of the national debt is a worthy object.
Attorney general Suella Braverman, who was acting pursuant to her duties in relation to charities said: 'As parens patriae, it is my duty to protect charitable interests in England and Wales, and I welcome the High Court’s judgment today and the clarity it provides. At the heart of my thanks, submissions before the High Court was a fundamental principle of charity law: a donor’s wishes must be respected.'
William Henderson, instructed by the Government Legal Department, appeared for the attorney general; Robert Pearce QC and Daniel Burton, instructed by Macfarlanes, for the trustee.