Bullying

Hello Lilylaundry. This is a horrid situation for your granddaughter and a difficult one for you to deal with, but may I suggest you reframe the way you think about the girl who is doing the bullying? She is undoubtedly behaving badly, but I doubt she is evil, she too is just eleven years old and something has gone wrong with her life or moral compass to cause her to act in this way. I know it's hard to do this (I have a daughter who was bullied mercilessly so I'm not unsympathetic to you), but I often think bullying has two victims; the bullied child and the perpetrator.
For informed help and advice you can contact the helpline of Bullying UK, or call Childline. If you click on the blue links there is a lot of advice that you may find helpful, but a chat to one of the helplines may be more beneficial.

I think this is a friendship that is coming to an end; the girls have different schools, friends and homes and they are moving in different directions; one is more reluctant to move on than the other. Naturally you are horrified at what you have learned, but you need to give this girl a chance to explain herself. You have known her for eight years, observed her at close quarters in your own home, yet gone from thinking her to be 'perfect inside and out' ( not a very sensible comment to make about a child) to calling her 'evil, manipulative, controlling and a bully' based purely on what your grand daughter has said. She may well have changed, but have you personally seen any evidence of this?
Bullying flourishes in a climate of secrecy and needs to be tackled quickly, openly and fairly. At the very least you need to explain to the other girl why she is no longer welcome in your house, and listen to what she has to say.
You must also persuade your grand daughter to discuss it with her parents.