Under the terms of the agreement a new organisation, London Qualifications, will take responsibility for all Edexcel's existing courses and qualifications including GCSEs, GCE A and AS levels, GNVQs, NVQs and BTEC Higher National Certificates and Diplomas. Pearson will own 75% of London Qualifications and the Edexcel Foundation will own the remaining 25%. Pearson plans a multi-million investment programme over the next five years through London Qualifications to introduce a technology-based approach to marking and processing examinations.

The Qualifications and Curriculum Authority has accredited and will regulate London Qualifications, which will make no changes to the current Edexcel processes until the 2003 summer examinations cycle is complete, to ensure full continuity of service.

London Qualifications will be led by Martin Cross, the former Director General of the OCR examinations board, as Chairman and John Kerr, the current Chief Executive of Edexcel, as Chief Executive. Edexcel's 800 employees will transfer to London Qualifications. Garry Hawkes will remain as Chairman of the Edexcel Foundation, which will continue to operate as a charitable organisation providing grants to the education sector with a particular focus on vocational education and training.

Over the past 50 years, Pearson has developed a technology-based approach to marking and processing examinations which is used extensively in the US and around the world. In this process every completed examination paper, whether it contains multiple choice or essay-type questions, can be scanned, made available to markers on screen and stored electronically. This enables examination papers to be marked and results to be reported faster, more reliably and more securely than in a traditional paper-based process.

London Qualifications now plans to implement this approach in the UK over the next five years and the potential benefits to schools and students include:

• Quality: Examinations can be marked by two or more examiners simultaneously, enabling the awarding body to monitor marking accuracy in real time.
• Security: Examination papers are stored electronically, reducing the risk of lost papers.
• Transparency: Individual examination papers are tracked through the reporting process and marked scripts can be returned to candidates and teachers.
• Speed: The process can reduce the time required to mark and process examinations and publish the results.

Martin Cross, Chairman of London Qualifications, said: "The creation of London Qualifications provides a real opportunity for a step-change improvement to our examination processes. We are determined to grasp that opportunity for the benefit of students, teachers and parents."

Edexcel's Chief Executive, John Kerr, said: "The examinations system has been under intense pressure for some time. We have proved we can cope with this, but coping isn't good enough. If we are to deliver the quality and standards of service that teachers, students and parents deserve, we need investment, skills and technology that we cannot deliver alone. With its commitment to education, its testing experience and its proven technology, Pearson is the obvious partner and this agreement enables us to modernise our processes and ensure continuity."

Clive Hay-Smith, President of Pearson assessment and testing, said: "Edexcel has recognised the need for significant investment in technology and new processes and we are delighted to make this long term commitment to UK education. The UK's world-class qualifications deserve world-class examination processes and through this partnership with Edexcel we are determined to play our part in realising that vision."