A MAJOR shake-up has been announced by the crisis-hit national arts funding body following a storm of criticism from hundreds of artists.

Creative Scotland, which distributes £80 million of Government and National Lottery funds, has announced new internal reforms a fortnight after its chairman, Sir Sandy Crombie, received an unprecedented letter of protest from more than 400 artists.

The body, a merger of the old Scottish Arts Council (SAC) and Scottish Screen, has already launched two internal inquiries to study "operational" issues and the use of Lottery funds.

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But last night Sir Sandy also announced a fundamental shift in the way Creative Scotland works, and a return to emphasising specialised knowledge when dealing with artists and companies – regarded as one of the strengths of the former SAC.

One key difference between Creative Scotland and the SAC is that the new body has portfolios, or groups of different genres of cultural activity, led by managers rather than directors of particular art forms.

This structure, which was decided upon in the body's business model in 2009, has left many artists and companies confused about who to talk to or how to apply for funding, as well as feeling detached from staff who know their work and genre.

Funding streams with opaque titles such as "Quality Arts", "Innovation" and "Talent" have also proved to be a major problem, with many artists and companies unsure of where and how to apply. Sir Sandy, in a statement, suggested this will now change, clearer language will be used, and the specialist knowledge of different art forms, which artists and companies valued and trusted at the SAC, will be emphasised again.

However, sources say a complete reversion to the SAC's former structure will be impossible.

Creative Scotland has sometimes over-stretched staff, insiders say, and has extra responsibilities in its remit, such as the creative industries, film, education, design and craft.

Sir Sandy said: "We will look again at our structure to ensure appropriate prominence is given to art form specialism and to ensure specialist knowledge is used effectively in our decision-making processes.

"We will also be looking at whether our staff members have sufficient time to spend in constructive dialogue with people in their sector in order to maintain their skills and knowledge levels."

An insider said nothing was off the table at the moment, and that the role of portfolio managers could be changed slightly or radically.

It is believed some personnel, including respected figures such as Amanda Catto, an expert in the visual arts, Anita Clark, the dance expert, and Ian Smith, former head of music at the SAC, could have their roles strengthened or enhanced.

Sir Sandy added: "It's important that we acknowledge a lot of these concerns are valid and we welcome the chance to air the issues through honest and open dialogue with organisations, representative agencies and individuals. Indeed, that process is already well under way."

The chairman, former chief executive of Standard Life, also said the board had been taken aback by the level of criticism of the arts body.

The crisis began earlier this year with the removal of fixed-term "flexible funding" from more than 40 arts organisations, to be replaced by Lottery-funded projects.

He said: "The board has been surprised by the strength of feeling expressed over recent months. We will look at how board members can learn about issues much earlier.

"We continue to be committed to giving high-performing cultural organisations the resources and confidence to plan over the longer term, but now see that this commitment could have been more clearly expressed in recent months. Creative Scotland's funding comes with various requirements, limitations and expectations from the Government and Lottery because these are public funds.

"However, we aim to be more flexible and limit burdens and bureaucracy being imposed on our applicants, whilst remaining fully accountable."