Schools and frontline services across Sussex face losing millions of pounds under a new "hurt the rich" Government spending formula.

Local government minister Nick Raynsford yesterday unveiled plans to overhaul the way money is allocated to councils and emergency services.

The proposals aim to heal the North-South divide by shifting cash from "wealthy" areas to the traditionally poorer North.

Forecasts by The Argus show the effect the new formulas would have had on this year's budgets. West Sussex County Council would have lost up to £15.7 million from its £538 million. East Sussex would have seen its £376 million cut by up to £14.6 million. Even Brighton and Hove City Council, which has recognised areas of deprivation, would have lost up to £4 million from its £237 million budget.

Sussex Police's annual £183.2 million allocation would have fallen by up to £4.1 million.

The proposals have triggered outrage. Peter Jones, Tory leader of East Sussex County Council, said: "If those figures are correct, Nick Raynsford had better tell me which schools we'll have to close and which services to withdraw.

"There is not the capacity to make up for that sort of difference in East Sussex. We are one of the poorest counties in the country, with wages way below average. We have a population made up of 26 per cent pensioners. These are not people who can afford to subsidise the poorer areas of the North."

Brighton and Hove City Council deputy leader Jackie Lythell said: "We will all be concerned if there is a loss of grant."

She said the council had anticipated the cuts and already asked the city's three MPs to lobby on its behalf.

The council will use the 12-week consultation to put its case and stress the problems it faces in paying for homelessness and social care. The council's opposition Tory leader Brian Oxley said: "It's ironic and outrageous that, after all the talk about education, education, education, schools should be the hardest hit."

Eastbourne's Tory MP Nigel Waterson said: "The Government now looks as though it is determined to reward their traditional heartlands in the north at the further expense of people elsewhere."

Paul Smith, secretary of the North Sussex Trade Union Council, said there was already room for improvement in education in north Sussex and the new funding would just make the situation worse.

Instead of publishing a single set of proposals, Mr Raynsford outlined a series of different options for making the grant system "fairer and simpler".

He will decide which of the options to introduce after the consultation.

But every formula for giving cash to schools would lead to Sussex's three education authorities losing out.

None of the councils will actually see its budget slashed when one of the options is introduced next year.

But they will effectively lose out as their budgets will be frozen or only increase by the smallest possible amount.

Mr Raynsford admitted the funding changes would redirect cash from some of the country's wealthier areas to poorer ones.

Sussex Police warned the cost of budget cuts would have to be picked up by the taxpayer.

A spokesman said: "Anything that takes central funds away from Sussex will inevitably lead to increases in council tax.

He said the feeling in other parts of the country that all of Sussex was part of the comfortably-off, leafy South was wrong.

David Rogers, chairman of the police authority, said plans to recruit more officers would be put in jeopardy by the new formula.

A West Sussex County Council spokesman said cutbacks would make difficulties recruiting teachers even worse.

He said: "The cost of education is higher than in other parts of the country. For instance, recruitment costs and salary costs must be higher to meet the higher cost of living.

"The Government is risking standards in education through these extreme proposals."