Arts Council England (ACE) is to slash its workforce to save £6.5m a year in administration costs.

The planned overhaul includes a 24 per cent reduction in the number of employees, cutting the executive board from 14 members to nine, and a centralised and expanded Grants for the Arts team to be based in Manchester.

ACE's nine regional offices will be streamlined into four new areas - north, Midlands and south-west; east and south-east, and London - resulting in fewer senior management roles. The proposals are to be implemented by 2010.

But Stephen Snoddy, director of the New Art Gallery Walsall, said: "My concern is the loss of long-term, healthy working relationships with established ACE regional staff. I also hope that the London-based ACE visual arts team remains as strong and strategic as it has always been."

An ACE spokeswoman stressed that the planned changes would not affect the budgets for regularly funded organisations. "The intent is for Arts Council England to truly become one organisation that has a national strategic vision informed by local expertise, and working more closely with the arts organisations it funds," she said.

The ACE cutbacks follow a major Treasury spending squeeze which requires £5bn in savings to be found across all government departments by 2011. According to ACE, its investment in the visual arts is to increase 16 per cent until 2011.