Melorio has continued its plans to consolidate the UK’s vocational training sector after agreeing to buy two information communications technology (ICT) vocational learning providers.

London-based, Melorio plc, has announced that the reverse takeover of Oxfordshire-based, Zenos Limited and Zenos Learning, which specialise in government funded ICT vocational training, will be completed on December 3rd 2008, subject to shareholder approval.

The deal reflects Melorio's plans of growth within the vocational training sector. In October this year the company acquired Construction World Ltd, which provides on-site training and assessment for the construction industry, which cost £35 million. Zenos is funded by the government's Learning and Skills Council (LSC), which is committed to improving and raising the standards of further education and training, to make learning provision to the needs of the individual and employer. Zenos offers Advanced Apprenticeships and NVQ levels two and three qualifications to employees in the IT workplace, as well as training school leaver through its 14 academies.

Recent government reforms are also helping schools to become increasingly responsive to employer demand. Diploma programmes have been expanded to introduce more vocational education for 14-16 year olds, responding to the skills gap, as identified by UK employers. From September 2009 72 per cent of secondary schools and 88 per cent of colleges will be offering diplomas.

In the 2007 LSC grant letter, some £11.4 billion was allocated for post compulsory education and training in 2007-08 of which £0.6 billion was allocated as capital grants. This compares to £10.5 billion in 2006-07. Spending on 'young learners' for 2007-08 was £6.1 billion compared to £3.1 billion for adult learners. LSC is expected to grow by just 1.9 per cent to £11.6 billion in 2008-09 (this is likely to represent a decline in real terms), but growth is expected to accelerate at 3.6 per cent in 2009-10 and 4.8 per cent by 2010-11. Last year the government put £460 million into its 'Train to Gain' scheme, and funding is set to increase sharply. The government wants all workers to have some qualification, but an initial target is to increase to 90 per cent those with a Level two NVQ, equivalent to five GCSEs, by 2010.

Adrian Carey, executive chairman, Melorio, said: "The main reason for acquiring Zenos is that it is a brilliant business and they have a high quality management team. It is a major growth opportunity. We are delighted to announce the acquisition of such an outstanding business that will diversify our service offering and revenue streams, add breadth to the qualifications we offer and increase our profile as a nationwide, multi-disciplinary vocational training provider.

"Growth will come not just from the existing 14 academies that Zenos already have, but also from new academies and an increase in work based learning. We have already done a lot of work to identify where to open new academies and we hope to open more in the early part of next year. Sites under consideration are in London, the South East as well as possibly Bristol. These areas do have a good number of strong ICT employers and technology jobs available to students. It is very important that there are good jobs based there for work placements and for full time jobs after the students have qualified. It is a great business, with strong growth potential, which is very good for the employers and for the young people looking for work in the ICT industry."

Carey added: "In terms of consolidation occurring in the industry, a lot of poor provision has been taken out through loss of contracts for colleges and independent training providers. This is a good thing for the sector as this means the further education sector is consolidating towards quality. Those who lost their contracts were either forced to go out of business or in the case of colleges, because of the local political issues, were encouraged to merge.

 "Both the Tory and Labour parties have very big plans to dramatically increase training, and good quality training organisations will need to deliver that. There are relatively few organisations that have the ability, ambition, the quality, the financial and management skills to do that at the moment. The strong independent providers and colleges are growing and can deliver what the government wants to achieve which are more qualifications. The vocational training sector was, and still is, a very fragmented market."

According to Carey: "In a few years time there will be a very significant shortage in the skilled trades, as the ‘baby boomer’ generation start to retire. There have been an inadequate number of young people entering the apprenticeship trades such as construction workers, electricians and plumbers. The launch next year of the new National Apprenticeship Service, the marketing of which is to be fronted by Sir Alan Sugar, will be promoting apprenticeships widely and this is very welcomed.

"The provisions of the education and skills bill are also good news, to have this means that it is a very exciting future for all of us in the vocational training market.  Lord Leitch's report on how to increase the skills of the nation's workforce is spot on. A good level of funding is available through government's Train to Gain initiative, and the new skill bill, which gives eligible employees the right to have time off to study for their qualification while working is tremendous."

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