What, you might ask, does the Employment Department know about education and, in particular, about schools? The answer is a good deal more than you might think.

Those who will be transferring to the new Department for Education and Employment bring with them nearly 20 years of first-hand experience and regular contact. This was the department which designed the Technical and Vocational Education Initiative, perhaps the most significant curriculum development programme we have seen this century, and helped to bring into existence Compacts and education business partnerships. It has spent more than any other department in developing the new educational technologies. It was ED which created the National Council for Vocational Qualifications. And it is ED which has done more than any other department to bring further education, that Cinderella of the education system, in from the cold.

But ED brings something more significant still. The Youth Training Guarantee, introduced nearly 20 years ago, first made ED aware of the vital importance of including everyone in the community in opportunities provided. That guarantee has been honoured for the past 18 years. It has been honoured because ED has roots and branches in every locality.

The staff of ED know what poverty is like; they know the physical conditions in which families grow up; they know how poor are the premises in which many young people learn; they know the consequences of lack of rural transport; and they know the hopes and frustrations of individuals of all ages who, day in and day out, pass through their local offices, the Job Centres, which will be part of the new department.

So those in education need have no fear that the staff from ED who form the bulk of the new department (outnumbering DFE staff by 20 to 1) are ignorant, insensitive or inexperienced. They bring a lot to the new department, just as DFE staff, with their finely honed administrative and legislative skills, and their concern for the quality of the process and the status of the teacher, contribute important dimensions which ED may not bring.

It is - or certainly ought to be - a very new department. It is not simply a question of everyone carrying on in exactly the same way. The new department will now have powerful regional offices with large direct-spend budgets of their own. Those offices will be part of the integrated regional offices of Government and thus looking to contribute in a major way to plans for economic regeneration. That will mean that resources can be focused and targeted. It is good news for primary and secondary schools in inner urban areas, for example.

And the new department, through the Job Centres, will now have local outlets - 1,000 of them. Those outlets are not just dealing with unemployed people. They are an information and counselling network with links throughout Great Britain. The foundations are there, with the new-look careers services, for all-age educational information and guidance, badly needed if lifelong learning is to become a reality.

The most immediate impact of the new department is likely to be seen in a determined move to bring vocational and academic educational qualification streams together as one. We must now surely see the merger of the School Curriculum and Assessment Authority and the National Council for Vocational Qualifications at an early date. Beyond that, following the current activities of Sir Ron Dearing, the way is clear to sort out the mess of post-16 education. That means, of course, coherent planning at local level;a common funding structure for educational and work-based routes, both part-time and full-time; and a common system of student financial support in which, post-18, there is no longer the discrimination we experience now between the FE student and the university student.

One of the responsibilities which the ED has had is for disabled people seeking and training for work: the disablement resettlement officers, employment rehabilitation and sheltered employment. All that will be transferred to the new department and open the door to an imaginative new look for all-age coherent provision for all those with special education and training needs. The opportunity should not be missed. And then expect a powerful drive, taking us up to the millennium, to equip schools and all education and training institutions properly with the exciting new educational and communications technologies. That implies, of course, a change of role for teachers as supporters of student-centred learning.

There may be significant institutional changes, too. I would expect the new department to look long and hard at creating local education and training councils, replacing the training and enterprise councils and, in the process, jettisoning those TECs which have underperformed.

There are possibilities for the development of the Office for Standards in Education. Quality assurance has never been the strongest point in the vocational training programmes of ED. I would expect Ministers to think hard about the possibilities of bringing together OFSTED with the quality assurance functions of the Further Education Funding Council and those who are working on such matters in higher education to make an all-age, all-stage, credible quality assurance system. It is badly needed.

This is an historic moment and an historic opportunity. Gillian Shephard’s task is to show that she understands that and can communicate it. We should look to her for a new integrated strategy to be published by the autumn and to be accompanied by a restructuring of the new department. The overall aim should be to make lifelong learning a reality; to remove barriers to opportunity and to progression, wherever they may be; to assure quality of provision; to secure achievement and not just participation; and above all to help us to do something we have never done which is to identify and release the potential of each and every person in our land. We have left it late - but we might yet pull it off.

Sir Geoffrey Holland is vice-chancellor of the University of Exeter and former permanent secretary at the Department for Education and the Department of Employment.