The recent exchange of vows between London Examinations, which offers GCSE and A-level syllabuses, and the Business and Technology Education Council, which specialises in vocational courses, will no doubt have goaded other matchmakers into action.

It is no secret that BTEC had made approaches to all the major examining boards since Christmas. The fact that BTEC and London Examinations face each other across London’s Russell Square must have made the practicalities of merger seem more easily surmountable. London Examinations’ delicate financial position - its staff has already been cut by 20 per cent - was another important driving force.

City and Guilds and the Northern Examinations and Assessment Board are in close consultation and the Royal Society of Arts has been talking to the Midlands Examining Group. All the exam boards, the Southern Examining Group included, are now considering mergers. Indeed, given that there are three awarding bodies and four major examination boards, there could be a scramble among the boards to avoid being left out.

The imperative for merger or close collaboration is very great. Sir Ron Dearing’s interim report on 16-19 education is expected next month. If, as anticipated, he recommends a closer relationship between academic and vocational courses as well as an intermediate level of accreditation, then a new awarding body spanning the vocational and academic divide must be in a strong position to tap the new market.

Tony Smith, chief executive of London Examinations, is in no doubt of the immediate benefits, independent of any recommendations Sir Ron might make. The new body, he said, would be able to undertake imaginative developments, producing core skills courses in, say, problem-solving, to complement A-levels and adapting A-levels to complement GNVQs. In this respect students would benefit from a more fine-tuned association between, say, a leisure and tourism GNVQ and two GCSE language courses.

There would also be the possibility of a common first year. Mr Smith said: “If you take away fee differences (GNVQs paid for at the beginning, A-levels at the end of courses) you take away the remaining commercial pressure against a common first year.” The rapid development of modular A-levels alongside modular GNVQs makes the possibility of taking common options in the first year and specialising in A-level or GNVQ or both in the second, much greater.

“I think it will change the face of examining for the better,” said Mr Smith. “Students are not well served by the present situation.”

Mergers are not new to the examining world. Indeed, since the introduction of GCSE they have been happening apace. The Midland Examining Group has recently emerged out of a morass of alliances brought about by a more entrepreneurial University of Cambridge Local Examinations Syndicate, which led to mergers between the West Midlands and East Midlands Examining Boards and an amalgamation of the Oxford and Cambridge Board with the University of Oxford Delegacy of Local Examinations.

The Southern Examining Group represents a new association of the Associated Examining board and the Oxford Schools Examination Board. NEAB is a product of an amalgamation of the Joint Matriculation Board with four other Northern CSE examining boards in 1992.

Indeed, the Pounds 100 million-a-year exam market is fiercely competitive. Fees to schools are kept down; costs are high. Pressures for further streamlining are therefore very great.

A-levels have always been a loss leader for the exam boards, due to high developmental costs, which in the past were subsidised by the O-level market. For example, the NEAB loses at least Pounds 250,000 on A-level foreign languages. Moreover, A-level costs have escalated. Increased competition and curriculum requirements have meant exam boards are constantly revising syllabuses and the increase in modular A-levels has required heavy investment. But the enormous number of GCSE changes has meant that this, too, has required an onerous financial commitment and that profit margins are continually squeezed.

The introduction of GCSE short courses is only adding to the costs, as is the switch from coursework. In 1993 NEAB’s English language and literature GCSE was comprised entirely of coursework requiring one moderator to examine one folder of work. For the same qualification now, coursework still requires moderation, but is only one component alongside three externally marked exam papers.

In 1993-94, NEAB’s Pounds 336,000 surplus translated into a Pounds 2.141 million “operational” deficit.

London Examinations has captured only 16 per cent of the GCSE market compared to around 30 per cent for NEAB and MEG, making its costs proportionately higher. In 1994 MEG ran into difficulties when its GCSE entries dropped by around 260,000 from 1.5m to 1.26m, implying financial losses of around Pounds 4m, while SEG gained proportionately (862,000 entries increasing to 1.2m entries). Many schools perceived that SEG’s GCSEs were easier, in maths especially, a fact which led to a Government inquiry into standards.

London Examinations last year cut fees paid to examiners for marking scripts while NEAB dropped minority-language GCSEs in Ukrainian, Polish and Modern Hebrew, a move which led to vociferous protests from the Jewish and Polish communities. However, the Pounds 35,000 cost of subsidising Modern Hebrew was becoming increasingly difficult to justify.

In a bid to attain common standards the Government has sought to cut the number of syllabuses exam boards can offer. It also wants some common questions in future. This makes it increasingly difficult for boards to pretend that they can offer a truly independent flavour and means that renewed efforts will be put into services to schools. It also means that in some areas innovation may be reduced. Anxious to corner as much of the GCSE market as possible, boards are more likely to plump for the safe middle ground.

So far the Government has demanded separate tracks for vocational and academic qualifications, insisting on preservation of the “gold standard” A-level. Thus far, the vocational awards bodies have not been allowed to offer GCSE syllabuses in English, maths and science and exam boards are prevented from awarding vocational qualifications until 1997 when the Government is committed to reviewing regulations.

The three main boards, NEAB, MEG and SEG, have all stated that they have the expertise to award vocational qualifications, and the vocational awards bodies have no doubt that they could be key players in GCSE. Total liberalisation of the market would inevitably lead to mergers or takeovers, given increasingly narrow profit margins. BTEC and London Examinations have done well to make the first move.

However, while the division between academic and vocational qualifications remains so marked - the one a knowledge-based qualification assessed largely by unseen written examination; the other a modular, competence-based qualification based on internally assessed coursework - some still doubt the benefits of merger. Tony Smith has said the BTECLondon Examinations merger will not result in substantial staffing cuts, for example.

While the two validating bodies, SCAA and the National Council for Vocational Qualifications, are run by different government departments with radically different philosophies (the Department for Education and the Department of Employment) the difficulties for examining bodies are obvious.

George Turnbull, SEG’s director of public relations, believes the benefits from any merger cannot be fully felt while the academic-vocational divide remains. He said: “To my mind there should be no difference between the academic and vocational in terms of assessment. Either internally assessed work is good or it isn’t.

“If Dearing suggests there should be a merger between the academic and vocational then there should be a merger between the Government departments controlling the rules. SEG might then need to consider some sort of merger itself.”