St Andrews University is facing a financial crisis, as the higher education sector battles with major funding shortfalls due to coronavirus.

The principal of Scotland’s oldest university said it faced a “hole in our financial position” of at least £25 million – described as “as serious a financial crisis as our university has faced in modern times”.

Urgent talks are being held between universities and the Scottish Government to discuss financial support.

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The Guardian reported St Andrews’ principal, Professor Sally Mapstone, sent a letter to staff on Thursday warning difficult decisions would have to be made.

She said: “I need to make you all aware that, as a result of the Covid-19 pandemic, the university is already facing a hole in our financial position of over £25 million this year.

“This is largely made up of losses in research grants through the lockdown period, the loss of conference and accommodation rentals over the summer, and our decision to act in a socially responsible manner by being one of the first universities in the UK to release students from their accommodation contracts.

“It does not take account of further losses to revenue which we would reasonably anticipate incurring as the global Covid-19 crisis continues.

“It is as serious a financial crisis as our university has faced in modern times, and it will mean that we cannot do everything you want or expect us to, and that we have to take some very difficult decisions about our future.”

Scottish universities have around 250,000 students and staff. Some institutions are contributing to the fight against coronavirus by carrying out tests in laboratories.

Education Secretary John Swinney has held a meeting with representative body Universities Scotland to discuss a rescue package.

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Mr Swinney said: “The scale of the financial challenges facing higher education institutions are clearly very serious and, in order to inform the development of a package of support from the Scottish and UK Governments, ministers will work closely with the sector on how our universities can remain at the forefront of global education when we emerge from this crisis.”

Professor Andrea Nolan, convener of Universities Scotland, said: “We welcome the urgent attention the Scottish Government has given to understanding the range of financial challenges facing universities as a result of Covid-19.

“We won’t know the full financial impact on our universities for some time but it’s clear that it will be very significant and without a major financial intervention from the UK and Scottish Governments, the future of Scotland’s universities is at risk.”