Oxfam could be about to make a huge raft of redundancies in a bid to plug a £16m deficit, reports have alleged.

The Times reported the revelation was made in an internal memo, written by the charity's chief executive, Danny Sriskandarajah, which was leaked to employees.

According to an article published in the paper today, the memo warned Oxfam staff that the charity is approaching a "difficult time" and that a 'budget gap' would need be filled by 'reducing core costs'.

Oxfam's income stood at £434.1m in the year to 31 March 2019, which was significantly above the charity's spending of £397.5m in 2018/19.

However, the staff memo has explained the charity now faces a deficit of £7m in 2019/20 and a further £9m in 2020/21 if action is not taken.

In the wake of the Haiti scandal, the charity was forced to withdraw applications for new government funding until the government felt satisfied with the the organisation's safeguarding practices.

However the scandal is alleged to be just one of many reasons for the financial problems, including a 'steady decline' in donations across the sector as a whole and a loss of trust in charities.

Oxfam's retail figures peaked over Christmas 2019, but the staff memo said this performance was not enough to solve the wider financial issues.

The organisation cut around 100 jobs in 2018 shortly after the Haiti crisis, making this the second batch of job losses at the charity over the past two years.

In a statement, the charity said it would be it is 'accelerating' the process of its operational review, which is likely to involve some significant cuts.

“Our chief executive announced in April last year that Oxfam would be conducting a strategic review of our operations to ensure that we adapt to a changing world, live our values and are as effective as possible in fighting poverty over the next 10 years," the charity said.

“The current challenging environment for charity fundraising and cost pressures mean that we are accelerating that process and we have informed staff. We are currently working through the details and will make an announcement in due course.”

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