Huge donation awaits UK Treasury - but there's a hitch

LONDON (Reuters) - An anonymous half-million pound bequest to Britain has mushroomed to 350 million pounds since it was made 85 years ago, trustee Barclays Bank said on Saturday - but London lawmakers can not get their hands on it.

The donor left the money in 1928, but said it should only be handed over once Britain had amassed enough funds to pay off its entire national debt, which now totals 1.2 trillion pounds.

News of the current size of the potential payout came weeks after Britain's government struggled with the terms of another half million pound donation, in the will of retired nurse Joan Edwards.

A Barclays spokesman said the bank had been trying unsuccessfully to get permission through the courts either to use the 1928 bequest to make charitable grants or to hand it all to the Treasury.

"We've been working ever since we became the trustee (in 2009) to change the original objects, which say the funds can be used only to pay off the entire national debt," he added.

The Financial Times newspaper said the donation was probably inspired by Conservative Prime Minister Stanley Baldwin who in 1919, as financial secretary to the Treasury, urged the rich to help pay off Britain's debt from World War One.

It noted that donor had stipulated the trustees could use part of the funds to pay down the debt if, in their opinion, national circumstances merited a payment.

Neither World War Two nor any debt crises since have moved the trustees to pay out.

Barclays said it would continue working with the Attorney-General's Office and the Charity Commission to find a solution.

"It's a unique set of circumstances and heightened awareness of the national debt has occasionally generated interest in the Fund," said the spokesman.

This year, Prime Minister David Cameron's Conservatives and their coalition partners, the Liberal Democrats, initially divided Joan Edwards' money between them, saying it had been left to "whichever party" was in power when she died.

But they decided to hand the money to the Treasury after protests from newspapers and MPs who said Edwards had intended to help the nation, not political parties.

In a copy of the will seen by the Daily Mail newspaper, Edwards, 90, left her wealth to "whichever government is in office at the date of my death for the government in their absolute discretion to use as they think fit".

(Reporting by Stephen Addison; Editing by Andrew Heavens)