Parents' £2m bid to save private school

• Samantha Heron and Alice Bell show some student power. Pic Ian Georgeson

A consortium of ten families of pupils at St Margaret's School, which went into receivership last week, have pulled together a business plan that involves finding 2 million to pay off the institution's existing creditors.

The group, which includes parents who are experts in banking, property and marketing, yesterday said it was confident of finding the cash.

Last night, the school's receiver, Blair Nimmo of KPMG, said he was "happy to listen" to the parents' proposal when he meets them today. If successful, the parents will take over management from the existing board of governors.

Peter Cochrane, an economist with the Royal Bank of Scotland, which is also the Edinburgh school's banker, is heading the consortium. He told hundreds of parents at a meeting in the grounds of the school yesterday that it is possible to run the school as a sustainable business.

"We have had to take a hard-headed look at the school before we go to KPMG and accept that it is losing money," he said. "The school roll has been falling over the last few years, but costs haven't gone down to coincide with that, so the school has been operating in deficit.

"I do think there's a sustainable future for St Margaret's and it involves an increase in fees and a decrease in costs."

Teacher groups last night welcomed the proposed takeover, which would ensure at least some staff retained their jobs.

Ann Ballinger, general secretary of the Scottish Secondary School Association, said: "The most important thing in the success of any school is a group of committed parents behind the staff.

"This is what we're seeing at St Margaret's. As long as they're realistic about it, then I don't see why it shouldn't work."

Mrs Ballinger said that she believed the parent takeover bid was a first for a Scottish private school. She added: "It costs a lot of money. Per capita expenditure for education is enormous. A number of them are willing to pay higher fees, though, so I wish them luck."

The parents have set up a number of meetings this week with groups they hope will help fund their plans, including the Royal Bank of Scotland. They say they are optimistic they can find the necessary cash.

"The school needs to pay off its creditors," said Mr Cochrane. "To meet our immediate need we will need an injection of equity. It would be wrong to ask a white knight to do that without a proper business plan, which is what we have been working on."

Although parent-run, the school would continue as a not-for-profit charitable trust, and maintain the tax incentives this provides. It would change the terms of the trust, however, to ensure that the board of governors is always made up of parents of pupils at the school.

The plan includes selling St Hilary's House, where the St Margaret's School nursery and early years section is based, and ceasing working with under-fives. It also involves considerable cuts to existing costs, including reducing staff numbers throughout the school. Many of the existing 86 full-time staff will still be made redundant.

At yesterday's meeting, members of the consortium called on all the parents of the 397 pupils presently attending the school to agree to stay if it can be rescued. More than 250 agreed to support the plan, including raising the fees, which currently range from 1,552 to 2,456 a term.

Mr Nimmo, told The Scotsman he is due to meet with the consortium today to discuss their proposal: "I'm happy to listen to whoever is representing the school and if they have something sensible to put forward, that's great. Normally they would make an offer for the business and the assets of the school. If they can do that and it's a satisfactory offer, then that's fine."

Yesterday's public meeting was also attended by hundreds of former pupils and supporters, including the great granddaughter of James and Annie Buchanan, who founded the school in 1890.

Ellie Buchanan said: "This is very emotional. The closure of St Margaret's would be like a death in the family. My great-grandmother sold it in 1926, but it has been a presence in our family for over a hundred years. One of my cousins was a governor and my sister was a governor, and my nieces were pupils until recently. It would be devastating."

Many parents at the meeting expressed anger that they had not been informed of the school's dire financial position before last Thursday, when they received an e-mail telling them of its imminent closure.

Val Devlin is chair of the school's Parents and Friends Association and, alongside the former pupils association, was involved in setting up the consortium. She said: "We were in the dark about this situation until Thursday night. This has come as a bolt from the blue.

"People, including the former pupils association, are angry that they've not been asked to help. They are prepared to put a lot of money into a trust fund. Some of the fees have also not been increased for some time. This school is totally viable.

"We have several financial experts who are parents who have looked at the annual accounts and they know it can be done."

Other parents at the meeting were relieved that efforts are being made to save the school. Colin and Miriam Ferguson's daughters, Hannah, 12, and Isla, nine, are already pupils at the school, where they are also intending to send three-year-old Olaia.

"We moved Isla here a year ago and it was a huge decision because education is the most important thing to us. Hannah is distraught and described it as like losing a favourite aunt," said Mr Ferguson.

"We've been ecstatic at the progress of the girls at St Margaret's. When Hannah came, she was a year behind and she caught up in a year. We're definitely prepared to support this plan."

Most of Scotland's independent schools are run as independent charitable trusts, with a board of governors which may include parents.

Jordanhill School in Glasgow is Scotland's only independent state school, funded directly from the Scottish Government and run by a board of directors including parents and staff.