The Conservative Party is drawing up plans for drastic job cuts at Ofgem, the energy regulator, as part of a sweeping overhaul of British energy policy, The Times has learnt.

Senior Tories said that the party was working on an energy policy document to be unveiled within weeks that would include a proposal to strip Ofgem of all its strategic powers on energy security.

The document, which is likely to be published in the run-up to the United Nations’ conference in Copenhagen in December, will set out plans for many of Ofgem’s existing powers to be reclaimed by the Department of Energy and Climate Change (DECC).

Ofgem’s new role would be reduced to that of a pure market regulator and consumer protection body closely aligned with the Office of Fair Trading (OFT). It is thought that as many as half of Ofgem’s workforce of 345 could disappear under the new structure and its £42 million budget could also be cut. Ofgem is considered an “obvious target” for spending cuts because the loss of part of Britain’s energy regulator is not expected to arouse popular anger, unlike frontline public services.

One person familiar with the plans said that the party believed such changes could be implemented “fairly quickly” — that is, within a few months. They could be included in emergency spending cuts as part of a 100-day Budget announcement.

One senior Tory said that a Conservative government would place a priority on having an explicit energy policy: “It should be the responsibility of ministers to set national energy policy not the regulator.”

Charles Hendry, the Shadow Energy Minister, insisted that the Conservatives had “no settled view” on the future of Ofgem. However, he questioned why some of its recent work, such as Project Discovery — a detailed forecast of Britain’s energy security over the next decade — addressed “pretty fundamental questions of energy policy”.

Ofgem declined to comment on the Conservative’s plans.

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