Guidance

Terms of reference for Ofgem skills and capability review

Published 8 July 2026

Context

Driving regulator performance is a key part of the government’s Regulation Action Plan. As part of this, the Department of Business and Trade (DBT) is undertaking a programme of expert-led reviews to help regulators tackle challenges and seize opportunities to promote growth. These range from comprehensive reviews to more targeted versions, like this skills and capability review, that focus on specific issues.

The Department of Energy Security and Net Zero’s (DESNZ) review of Ofgem sets out that the UK energy system is undergoing significant transformation, with new technologies and business models and a more complex, fast-changing market. The review assessed whether Ofgem’s structure, statutory duties and organisational culture remain fit for purpose and one of the core objectives was enhancing skills and capabilities.

The DESNZ Call for Evidence and wider stakeholder engagement highlighted concerns about Ofgem’s ability to keep pace with a rapidly changing energy landscape. Stakeholders pointed to high staff turnover and gaps in areas such as digital and financial expertise, alongside perceptions of a process-heavy culture that can slow decision-making.

The DESNZ review concludes that Ofgem should strengthen its capability to deliver more anticipatory, outcomes-focused regulation, including through a forward-looking skills audit and workforce plan. This should focus on regulatory best practice and priority technical skills, including digital and AI, alongside options to develop existing staff and bring in external expertise through recruitment, secondments or partnerships.

This skills and capability Review seeks to directly lead on from and support the following action from the DESNZ review of Ofgem.

Ofgem will work with government (DBT and DESNZ) to swiftly undertake an evaluation of Ofgem’s future capability needs, to equip it to deliver more anticipatory, outcomes-focused regulation that supports innovation. This will inform a Cultural and Capability Transformation Plan in the second half of 2026.

Scope

The review will focus on the future skills and capabilities Ofgem needs to regulate effectively as the energy system evolves, and the practical steps required to build and sustain them. This includes how Ofgem can:

This includes:

• plan for, develop, recruit and retain priority capabilities

• draw on external expertise where needed (including through recruitment, secondments or partnerships)

• respond to digital and AI developments

The review will also consider Ofgem’s recruitment and development approaches and barriers that they face (including as a Civil Service regulator). Ofgem’s overall pay envelope is out of scope and having regard to value for money and efficiency in public sector pay.

The review will address:

• future capability needs: based on likely future scenarios for the sector, the key skills and capabilities Ofgem needs

• building and sustaining capability: how Ofgem can develop, recruit and retain those capabilities, including workforce development and the use of external expertise

• barriers and solutions: the main obstacles to accessing and sustaining these skills, and practical options to address them to strengthen confidence in Ofgem’s capability

Approach and duration

The review will draw on the expertise of an external advisory panel and the evidence gathered through the DESNZ review of Ofgem to develop ambitious but practical, forward-looking recommendations. It will build on existing evidence wherever possible to avoid duplication and to focus on what needs to change to strengthen Ofgem’s future skills and capability. A final report will be written with recommendations for Ofgem and, where relevant, for government to consider and respond to in a timely way.

The review is designed to be time-limited so it can support delivery at pace while producing robust recommendations. It is expected to run for around 6 weeks, commencing 6 May 2026.

External advisory panel membership

The panel consists of 7 members, each bringing their own expertise:

• Guy Newey (Chair) - energy systems, innovation and regulation (Energy Systems Catapult)

• Basil Scarsella - networks and system delivery (UK Power Networks)

• Warren Buckley - non-executive perspective (Ofgem)

• Mary Starks - retail regulation and policy (OVO Energy)

• Aidan O’Sullivan - digital, AI and energy systems (UCL)

• Robin Ellison - skills and regulatory frameworks (Founder of Association of Pension Lawyers)

• Patricia Galloway - people and organisational capability (National Wealth Fund)

Consumer representative input

Gillian Cooper, Director of Energy at Citizens Advice, will not be a formal member of the panel but will provide views during the review from a consumer perspective.

Governance

The external advisory panel will provide independent expert advice and challenge to support the review. The final report will be shaped by this advice, with government finalising the recommendations to ensure they can be delivered rapidly and effectively. The review will be supported by a joint team of officials from DBT, working closely with Ofgem and DESNZ, with engagement from other relevant parts of government as needed.