An unspent donation made to the Government 85 years ago, which is now worth £350m, cannot be touched because it won’t fulfil conditions of its use – paying off the national debt.

The anonymous donation of £500,000 was made in 1928 and established a fund which was designed to help the Government pay off the UK’s debt.

It was made with a strict request that it should not be touched until it was able to reduce the national debt to zero.

Although it has grown 700-fold since the 1920s, it is unlikely to achieve its target – the national debt currently stands at £1.3trillion.

While the fund is growing at a rate of £5m to £10m a year, Britain’s national debt rocketed by an estimated £121bn in 2011/12.

In the meantime, the fund, called The National Fund, is now managed by Barclays and is likely to keep on growing.

The anonymous donor who set it up at its outset is believed to have done so in response by a call from Conservative Prime Minister Stanley Baldwin, who wrote to the Financial Times in 1919.

He suggested it would be patriotic for British citizens to contribute towards paying off the national debt, which at that point had reached 140% of the total amount of money earned in one year by the UK (GDP).

Barclays Wealth and Investment Management is the fund’s trustee

By 1927, the national debt had reached 160% of GDP and it is thought that the donor was prompted to set up the fund with the belief that it would grow sufficiently to pay it off.

The National Fund has now grown to become one of the largest charities in the UK by net assets.

But unlike most charities, it takes in no donations and provides no handouts to needy causes.

Papers lodged with the Charities Commission in 2012 said: “The aim of the charity is to create a fund, that either on its own or combined with other funds, is sufficient to discharge the National Debt.

“The ultimate beneficiary of the National Fund is the National Debt Commissioners.”

The papers say the fund increased in value by £12m in 2012 which all came from dividends on investments. Last year it spent £570,000 on managing the fund and £430,000 on other activities.

Barclays has been trying for four years to get permission to use the money to make charitable grants or to turn it over to the Treasury, but any change would have to be approved by a court.

A spokesman for Barclays said: “We’ve been working ever since we became the trustee to change the original objects, which say the funds can be used only to pay off the entire national debt.

“We are working with the Charity Commission and the attorney general’s office to look at how best to take the fund forward.”

This week it emerged Joan Edwards left £520K to the Government

A spokesman for the attorney general’s office said: “There has been correspondence between the Charity Commission, the trustees and ourselves over the National Fund.

“We are looking at a number of options for the future of the Fund, consistent with its object of extinguishing or reducing the national debt.

“It would not be right to comment further whilst this process continues.”

A spokeswoman for the Charity Commission said is it continuing dialogue with the trustee and the attorney general’s office regarding the charity.

This week, the Tories and Liberal Democrats gave up a £520,000 bequest from former nurse Joan Edwards amid confusion over whether she actually meant the money to go to the state or to the political parties in power.