The Government has scrapped the Employment Department and divided its duties between the Department for Education and the Department of Trade and Industry.

In this week's Cabinet reshuffle, Gillian Shephard becomes Secretary of State for Education and Employment, a new department which will take over the DE's responsibility for training schemes, including those run by Training and Enterprise Councils, as well as continuing the current role of the DFE.

The Department of Trade and Industry will take on the DE's activities on industrial relations and pay.

The merger of DE and DFE duties was welcomed as "long overdue" by further and higher education heads and education pressure groups which have been campaigning for years for a unified department. Notable figures and organisations which have championed the idea include Sir Geoffrey Holland, vice chancellor of Exeter University, formerly Permanent Secretary of both the DE and the DFE; Sir Bryan Nicholson, chairman of the Confederation of British Industry and former chairman of the Manpower Services Commission and the National Council for Vocational Qualifications; and most recently the National Commission on Education.

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"It must be doubted whether effective action to ensure that the transition from education to work is properly handled is possible as long as these two departments . . . remain separate," the NCE said in its report Learning to Succeed.

The creation of a single department is seen as one of the first outcomes of Mrs Shephard's review of higher education. Much of the evidence stressed the importance of lifelong learning and updating. Merger will make it easier to coordinate work on higher level National Vocational Qualifications and General NVQs, and break down barriers between academic and vocational qualifications.

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Mrs Shephard is regarded as the right person for the job because of her experience as Employment Secretary, and her enthusiasm for initiatives like NVQs. Ruth Gee, chief executive of the Association for Colleges, said: "It looks as though this reconstruction of a party may lead at last to the construction of the first wholly integrated policy for education and training."

Bryan Davies, Labour's further and higher education spokesman, poured cold water on the move, despite expressing his enthusiasm for a merged department at an AfC conference last month. He said then: "I have a 20-year record of supporting that - but I can't advocate it". But he said this week: "While the move certainly assists the development of a more coherent education and training strategy, it does look like the Government has given up on a creative employment strategy."

The return of Michael Forsyth, former Scottish Office education minister, as Secretary of State for Scotland, heralds an abrasive chapter. He was noted as a confrontationalist for the pace of his educational reforms and for contested claims that these were the product of his Scottish Office Education Department officials, of whom he was merely a cipher.

The education unions complained that Mr Forsyth did not attach enough weight to the distinctiveness of Scottish education. He returns to find a devolved higher education system, and potentially more significant changes than Mrs Shephard's enlarged portfolio, with a proposed merger of the Scottish Office education and industry departments.

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David Hunt has left the post of Chancellor of the Duchy of Lancaster after 12 months, to be replaced, as minister responsible for the Office of Science and Technology, by Roger Freeman, minister of state for Defence since last July.

John Mulvey of Save British Science criticised the high turnover of science ministers since 1992, when the post was invented.