The United Kingdom is drawing on a charitable fund established nearly a century ago to write off a small portion of its national debt.

The Debt Management Office (DMO) said on Friday that it will cancel £607 million worth of government bonds using proceeds from the National Fund, which was created in 1927 with the ambitious aim of raising enough money to eliminate the national debt entirely.

The bonds being cancelled mature in January 2027 and are held by the Commissioners for the Reduction of the National Debt, the public body responsible for administering such funds. According to the DMO, the bonds were purchased following a transfer of money from the National Fund during the previous fiscal year.

Details of the fund’s origins were set out in a 2020 court ruling, which revealed that it was founded by Gaspar Farrer, a partner at the once-powerful but now defunct Barings Bank. The fund began with around £500,000 and grew substantially over the decades, though it eventually became clear that it would never be sufficient to cover the entirety of the public debt.

The UK’s national debt now stands at nearly £3 trillion, up from about £500 billion twenty years ago. This dramatic increase has prompted the decision to deploy the National Fund’s resources sooner in order to reduce the debt, even if only marginally.

The move follows a lengthy legal dispute over whether the fund’s assets could legally be used for debt reduction. In 2023, the Court of Appeal upheld a lower court ruling allowing the transfer of the fund’s assets for that purpose.

The DMO also maintains a dedicated Gifts and Bequests account for contributions from “public-spirited citizens” wishing to help reduce the national debt. Part of the same donation was used in July to cancel approximately £22 million worth of bonds.

It was not immediately clear why bonds maturing in 2027 were selected for cancellation, as this appears to diverge from the previous approach. Recent financial statements from the Commissioners indicate that National Fund assets had previously been used to purchase bonds maturing in 2025, with the intention of cancelling those instead.

A DMO spokesperson explained that, “upon maturity of the 3.5% Treasury Gilt 2025, the proceeds — including the redemption amount, interest, and balances from the Donations and Bequests account — were used to purchase and subsequently cancel the 4⅛% Treasury Gilt 2027.”