Ofgem review recommends pay flexibility and possible change to regulator's status
An independent expert panel says the energy regulator faces a strategic capability challenge. It calls on Ofgem to build data, digital and engineering expertise in networks and infrastructure delivery, and says government should prioritise pay flexibility for Ofgem.
The Department for Business, Innovation, Science and Trade (BIST) and the Department for Energy Security and Net Zero (DESNZ) published an independent review of Ofgem's skills and capabilities on 3 November 2026. It concludes that the regulator faces a strategic capability challenge as it prepares for its future role, while acknowledging that Ofgem has important strengths. The review applies to England, Scotland and Wales.
BIST, DESNZ and Ofgem jointly commissioned the review in response to DESNZ's wider Ofgem Review, as part of BIST's programme of expert-led regulator reviews. It sets out the findings of an independent expert advisory panel, supported by a government secretariat, and was carried out over six weeks.
The panel makes four headline recommendations. These are recommendations only, not decisions by government or Ofgem. The first is that Ofgem should invest in data, analytical and digital capability so it can become a more proactive, intelligence-led regulator. The panel also wants Ofgem to build deeper engineering and technical expertise in networks, infrastructure delivery, system operation and emerging technologies. It proposes doing this through a hybrid model of internal staff, secondments, expert advisers and partnerships.
On workforce, the review says government should consider, as a priority, giving Ofgem greater flexibility over its own pay structures within the same overall funding envelope. If that cannot be achieved under existing arrangements, the panel says government should consider changing Ofgem's status as a Civil Service non-ministerial department. That would give Ofgem the pay and workforce flexibilities already available to other regulators.
The report sets out the pay gap. Ofgem's median pay and benefits rose from £38,357 in 2021/22 to £51,303 in 2025/26, against Ofcom's equivalent figure of £65,774 for 2025/26. External benchmarking as at 2024/25 placed Ofgem in the bottom 10 of 72 Civil Service organisations for minimum and median salaries across most grades. Specialist salaries lag market rates by around 25%. Ofgem's staff turnover fell from 26% in 2021/22 to 12.6% in 2025/26, compared with 6.9% across the Civil Service.
The panel also says Ofgem should define its role in delivering energy-system data infrastructure. Its examples are mandating data standards and assigning responsibility for data on the location and capacity of distributed flexibility assets.
According to the GOV.UK publication page, the review's findings and recommendations will inform Ofgem's Cultural and Capability Transformation Plan.
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