If the Government doesn't cut all funding to Oxfam, nothing will change

Far too many people are looking for reasons not to give to charity or not to support the UK devoting 0.7 per cent of its national income to the world’s poorest people. We must show that we will not accept corruption in foreign aid. The resignation of deputy chief executive Penny Lawrence will not be enough

Oxfam cannot be allowed rewards for failure just because it has a 'nice' image (Chris McAuley)

The most charitable thing to do with Oxfam right now is to teach it and its peers a very sharp lesson in accountability. If we want to be sure that the organisation will reform and rebuild itself, and not damage the reputation of aid and development work permanently, then the Government has to cut off its funding. The replacement of deputy chief executive Penny Lawrence with another boss will not guarantee changes in behaviour thousands of miles away.

The Department for International Development, not famed for its toughness, has to make clear that, as a result of the persistent, endemic and institutional failings at Oxfam, the British taxpayer should no longer feel obliged to fund it – and that their money can be channelled elsewhere.

Thus, there should be an immediate announcement that the £32m a year Oxfam currently receives will be wound down in an orderly fashion. In the corporate sector failures on this scale lead to a slump in the share price, closures and redundancies, or even complete corporate collapse. It is how the capitalist system delivers for consumers.

The same should be true of NGOs – they cannot be allowed rewards for failure just because they have a “nice” image. Oxfam needs to be restructured, at the least, just as some time ago War on Want had to go through a similar process, albeit for very different reasons. It too was a hugely famous charity, but faltered and ended up in administration, having to be relaunched in 1991.

It seems precipitate, even unfair. To a degree it is. Yet we need not wait for some official inquiry or parliamentary report. The matter is too urgent, and the offences too urgent.

Far too many people are looking for reasons not to give to charity or not to support the UK devoting 0.7 per cent of its national income to the world’s poorest people (the UN target). The Oxfam scandals – for there will no doubt be others – offer plenty of excuses for selfishness and meanness. The whole sector is too valuable to muck around. It does indeed help the most vulnerable in the world and, thus, indirectly protect the West itself from the terrorism that often incubates in such places and creates waves of refugees who end up in Calais.

Now the charities need to be helped to reform themselves. Oxfam needs to be made an example of before the damage becomes pervasive and permanent.

Today, though, the Secretary of State for International Development, Penny Mordaunt, called in the bosses at Oxfam, gave them a telling off about the Haiti (and other) sex abuse scandals, and, one can assume, pressured Penny Lawrence into quitting. The caravan will move on and nothing much will change.

You need a much stronger culture of responsibility in any organisation – NGO, government body, private company, peacekeeping troops – to control the inevitable clashes that occur when the relatively rich turn up in very poor and devastated environments populated with desperate people – homeless, starving, fleeing natural disasters or war.

It is an old story, to be frank, and the temptations and opportunities for abuse and corruption will always arise. It is a question of discouraging and minimising it, and for that you need the right incentives and disincentives – financial and personal.

The only way to minimise this sort of abuse of power is by the strongest of sanctions against the perpetrators. Oxfam and others must know that their very existence could be jeopardised by the actions of their staff or volunteers; and those individuals must know too that there is no hiding place, no cushy job in some other unsuspecting charity, for them to slip into when the heat gets too much.

There is another question arising from the Oxfam affair, and that is that maybe these agencies are becoming a sort of PFI failure – the worst of all worlds. Oxfam as the Carillion of the aid sector? Sort of, yes.

Should a charity become reliant on public funding, which becomes virtually a guaranteed source of income? The problems with this are obvious. It takes the edge off their fundraising. It erodes the charity’s independence and ability to lobby and speak out for change. It effectively part-nationalises organisations that are supposed to be in the private sector, albeit non-profit making; and, conversely, it delegates responsibility for some tasks that might be better kept within Dfid or the “host” governments of the nations concerned (though that can also be problematic).

More broadly, as at home, there is also a real question about how much should be done by the state rather than by charities. This is essential work to foster economic development, civic society and human rights: should we actually rely on charitable giving for it at all?

Maybe charities are not the answer, except for perhaps emergency food aid. Because the more we think that sorting out the problems of the developing world is the job primarily of NGOs – ie someone else – the less we will consider that it is actually a British national responsibility. When those NGOs become discredited, then the there is no one left to support the most vulnerable. That is the tragedy of Oxfam.

This article was edited at 16:40 to reflect the news that Penny Lawrence had stood down as deputy chief executive of Oxfam