The phrase “independent grammar school” usually conjures up images of a sweeping drive off a posh leafy road leading to an impressive architectural frontage surrounded by acres of lawn, rugby field and tennis courts.

Not so in Hull. As you turn off the congested Cottingham Road, risking body paint as you squeeze your car down an alley by the side of the Catholic Church of Our Lady at Lourdes, you think you’ve made a mistake. You park (if you’re lucky) in a handkerchief-sized space in front of an odd assortment of Sixties buildings and walk back to the main road. Yes, there’s the sign saying Hull Grammar School. You look back at the buildings and the doubt remains until you meet a pair of cheerful sixth-formers who direct you to the entrance where Rob Howarth, the headmaster, is waiting. He takes you to his office along a narrow corridor on the first floor. It is cheerful but not grand.

Strange this, not even a frontage for the flagship school of a successful company that owns the largest number of independent schools (16) in the country. But you soon learn that what goes on inside the school more than makes up for any shortcomings in bricks and mortar.

Nord Anglia Education bought Hull Grammar in 1991 when it was bankrupt and about to close. A voracious company, it owns several schools abroad and a chain of Teaching English as a Foreign Language colleges. It is the largest private provider of careers guidance in the UK, and just this week won the contract to provide careers advice to Ministry of Defence schools overseas. Nord Anglia also runs “outsourced” services such as salary administration and legal advice to FE colleges, and supplies OFSTED inspectors.

When the company began trading on the Stock Market in February it was valued at Pounds 18 million. Indeed, the education business has made the man who started the company, Kevin McNeany, Nord Anglia’s executive chairman and a former secondary teacher from County Armagh, a very wealthy man (TES, May 30).

Not that he has any wish to sit back and enjoy the pickings. He is an energetic entrepreneur with burning ambition and a keen political eye who seeks to penetrate and improve state provision wherever he can. His independent schools are dear to him for the simple reason that he wishes to show the world the ways and means of turning around failing schools. He picks them up cheap, invests shrewdly but not lavishly, and makes them pay.

When the company, which is based in Cheadle, Manchester, takes over a school, it sends in its team of educational officers, many of them former heads and advisers, who go through the curriculum and staffing structures in fine detail.

Although a boys’ grammar for Hull after the Second World War, the school went comprehensive in 1969 and faced closure under reorganisation of the city’s schools in 1988. Old Grammarians were so incensed that they embarked on a rescue plan which included setting up a charity, putting up Pounds 500, 000, raising another Pounds 750,000 from bank loans, buying the present buildings from a group of priests - the Marist fathers - who had run a Catholic boys’ school, and filling it with children. When the school was declared bankrupt three years later, it had 500 pupils.

Rob Howarth had given up a respectable post as an economics teacher and acting deputy head at Bedford Modern School, a 1,000-strong HMC establishment, and was about to take up position as deputy head in Hull when the bombshell of the Hull bankruptcy broke. “It was hell; mayhem!” he says.“What I didn’t know was that pupils were paying extraordinarily low fees and many were paying no fees at all. I could fill the school tomorrow if I asked parents to pay what they could. Moreover some staff had been tempted in by very high salaries.”

When Nord Anglia stepped in, the head, an Old Grammarian, resigned and Rob Howarth - interviewed and appointed by Mr McNeany - took over.

Fees went up and salaries went down. The company did honour the special agreements trustees had made with parents. “If they hadn’t done that, we probably wouldn’t have had many pupils,” says Mr Howarth. It also had to pay off the trust’s secured debts. But things quickly began to turn around.

“The company’s officers were in here for the first few weeks,” says Mr Howarth, “but when they were happy they left us alone.”

The school, despite its humble physical appearance has now established a solid academic reputation with 90.2 per cent of pupils gaining five A-Cs at GCSE and an A-level A-C pass rate of 69 per cent. Three students gained places at Cambridge last year and although the roll dropped dramatically in the years immediately following the takeover, they have gone back up to 407 - and are still rising. The school now includes a primary division and a new nursery.

So why does a company take over a bankrupt school in a city where sending your child to independent school is contrary to the prevailing culture and where, in any case, a large HMC school (Hymers College) is doing very-nicely-thank-you down the road?

“I think he (Kevin McNeany) felt there was potential for a decent sixth form and he just wanted to prove that the school had been badly run,” says Mr Howarth. “Financially, we are now better off than half the independent schools in the UK. We don’t owe anybody a bean and we make a small profit.”

As a Cambridge economics graduate, Mr Howarth feels confident working to tight budgets. The first priority was to re-roof the west wing. The hall was refurbished but other things have had to wait. “We have to prioritise and get a number of estimates for everything we do,” says Mr Howarth. “I would like things to be done more quickly but we have to make money before we can spend it.”

To expand the sixth form, in 1991 fees were set lower than for junior years - not more as in most private schools. But this did not seem to work. “People seemed to think there must be something wrong with the provision,” says Mr Howarth. So the school last year introduced sixth-form scholarships whereby pupils gain a Pounds 90 reduction per term for every A or A* they gain at GCSE. That did the trick and motivated pupils. “We do all sorts of things to get people in,” says Mr Howarth. “We are not going to make things difficult, if, in the fullness of time, they are going to pay full fees.” Full fees at present are Pounds 1,350 a term for the senior school; Pounds 1,150 for the junior.

Outside the budget, however, Mr Howarth has had a great deal of freedom to fashion the school he wants, to create a unique character. Although selective, the school is not as selective as Hymers, though slightly more expensive, and trades on its smaller numbers and family atmosphere. Although all pupils are taught Latin in Year 7 and the sciences are taught and examined separately, the school is not an academic hothouse. Mr Howarth keeps an open door to staff and pupils, teaches English and PSE, takes cricket and runs the choir.

Although they would like more resources, many of the teachers who have previously worked in state schools - and who still earn state school salaries - are committed to the small-school ethos and a wide range of extra-curricular activities “Kids have to opt out of things here,” says Mark Roper, head of maths, “rather than opt in. I work harder than I did anywhere else but I enjoy it. The head is very pro-child, he looks for the good in everybody.” Twelve-year-old Tom Reed echoes such sentiments: “You’re not made to work hard here, but you work hard anyway because you like the teachers.”

Catherine Caley, who runs a farm with her husband David near Withernsea, sends her four children to the school. “Jenny (aged 17) started at the school before it went bankrupt. When they put the fees up, that was tough but we decided to stick with it. The grammar school is down-to-earth and family-based and we felt that was right for our children.”

The gospel according to Kevin McNeany

Our schools are run by a very small number of people - the head and a team of education officers. Our heads are genuinely empowered, the most unconstrained in the country. They are financially literate, they do not eschew that responsibility, but they have enormous freedom to interpret the curriculum. Any organisation run by committee is inherently inefficient. It cannot be good management to leave important decisions to a board that meets no more than two or three times a year.

“We try to accentuate what is good and unique about an institution and serve the local community. We are not a chain. Some of our schools are academic preps serving grammar schools with whole-class teaching and rote learning - the national curriculum has not diverted us from these things. Other schools serve children who need support and encouragement.

“Turning a school round is about showing where efficiencies can be made and judiciously making them. It’s about repairing the building in a modest way, using space differently, bringing out leadership qualities and stiffening resolve. It’s about giving teachers more responsibility for the institution. There is no simple formula but I would like to point the way with a dozen schools.

“We have to fight for every child. Nobody places one of their children in our schools unless they think they are going to get added value. State schools are allegedly in competition but you get few schools going to the wall.

“I would like somebody to challenge me to take over a two-form entry primary school - we would make it more efficient and successful academically and we would probably make a modest return.

“The nature of the catchment would not affect this. It’s the failure of schools to get parents behind them not the failure of parents. Parents not interested in the education of their child, irrespective of the level of deprivation, are few and far between.

“What the Government should do is reduce income tax and require parents to pay a sum of Pounds 30 to Pounds 40 a term. By making them consumers you empower them. I can say this from the standpoint of owning schools where parents have to pay for everything.

“Management of a school could be transferred to a company under a contract to deliver to governors an agreed level of service. That’s not the private sector taking over state education. After a time the Government might rescind the contract, and they might ensure step-in rights if the contract is jeopardised. It could all be done through the Public Finance Initiative which this Government supports. If Tony Blair wants it, he can have it.