The 100-year saga of one man's attempt to pay off the national debt

Telegraph

13-06-2025

Gaspard Farrer may be just a footnote in history, but he will be remembered fondly by Rachel Reeves.
A £585m fortune held by the wealthy banker, who died aged 85 almost 100 years ago, has finally been donated to the public purse after a seven-year legal battle.
Mr Farrer, a former partner at the now-defunct Barings Bank, is thought to have left £500,000 in 1927 as a gift to the nation in response to the UK's huge national debt after the First World War.
But rules stipulated that the so-called National Fund, established in 1927, could only be made available when it was enough to pay off the national debt in full. It means that for years, the fortune has been locked away from successive governments.
However, a 2022 High Court ruling ordered the funds to be released – a decision upheld after the fund's trustees lodged an appeal.
They were finally paid to the Debt Management Office (DMO) in the financial year ending in April, according to a Freedom of Information request seen by The Telegraph.
The DMO offers a little-known scheme that allows taxpayers to voluntarily contribute to paying off the national debt.
Last year, donations reached a record £585,112,933 – almost entirely due to the payment of the 1927 National Fund. It was one of 16 donations – three of which were left in wills and 13 were one-off payments.
In the nine years prior, just £175,000 per year on average has been donated to the scheme.
The legal wrangling for Mr Farrer's money began under Theresa May's government which successfully used a niche legal argument to prise open the savings pot.
The bid to tap into the pot used cy-près jurisdiction – meaning 'as near as possible' – which is applied primarily to charitable trusts whose original purpose became impossible to fulfil.
The funds were being looked after by Zedra Fiduciary Services who acted as the defendant in the case. The Telegraph contacted representatives for Zedra for comment.
The cash is now on the Exchequer's balance sheet, but will make just a 0.02pc dent in Britain's £2.7 trillion national debt, which has grown to the same size as the entire economy.
The funds were originally set aside as a £500,000 investment in assets, including gilts, by a donor who remained anonymous for decades. After the government of the day lodged its legal bid to obtain the money in 2018, Mr Farrer's identity was at last revealed.
The fund quietly grew in value for years until its transfer to the Treasury was revealed in a request made to the DMO by accountancy firm RSM. The documents confirmed it had received Mr Farrer's fortune.
Chris Etherington, partner at RSM, said: 'It is generosity of a level that the Chancellor could not have expected. It could provide some inspiration as to how additional revenues could be generated for the Exchequer.'
'No prospect of the fund ever paying off national debt'
When Mr Farrer's donation was first made, Sir Winston Churchill said the money was 'inspired by clear-sighted patriotism and makes a practical contribution towards the ultimate – though yet distant – extinction of the public debt.'
But doubts have grown over the years that the money would ever actually fulfil its original purpose.
John Glenn, a former culture minister, said in response to a parliamentary question in 2018 that 'there is no realistic prospect of the fund ever amounting to a sum sufficient to pay off the whole of the national debt'.
Mr Farrer's donation was held in the form of a charitable trust and was on paper one of the most well-endowed of its kind in the country.
John Picton, a reader in law at the University of Manchester, said using the fund to pay off national debt would be a 'missed opportunity' to donate to more worthy causes.
He added: 'It's a missed opportunity because the fund could have been kept in charity. I think it's unimaginative, personally.'
Mr Picton suggested the money could go towards a charitable fund for the Armed Forces, or to support the work of the country's museums and art galleries.
He said: 'In Gaspard Farrer's time, the national debt was associated with war debt and paying it off had a patriotic motivation and that's long lost.'
'But now the national debt, rather than having patriotic sentiments attached to it, is just a large number we all live with and grows throughout time. It's unthinkable now that people would want to voluntarily pay to reduce it.'
Mr Farrer's only other surviving legacy is his 11,438 square foot mansion in Kent. He commissioned the legendary architect Sir Edwin Lutyens to design the property, which was built in 1911. The eight bedroom house was recently placed on the market for £3.5m.