Pierre-Emerick Aubameyang’s second-half penalty was the difference at Old Trafford as Mikel Arteta’s side ran out 1-0 winners.
The loss is United’s third in the Premier League this season, while Ole Gunnar Solskjaer’s side struggled to create clear-cut chances against Arsenal.
Solskjaer opted to play a midfield diamond of Fred, Paul Pogba, Scott McTominay and Bruno Fernandes but Neville believes that was the wrong tactical approach and ‘wasn’t working after five minutes’.
The former United defender has also warned Solskjaer that he will have to ‘upset’ some of his midfielders in order to find a more balanced system.
‘You have six midfield players at the club: Nemanja Matic, Fred, Scott McTominay, Bruno Fernandes, Donny Van de Beek and Paul Pogba and you’ve somehow got to get them into a system, which is forcing Ole to play a diamond,’ Neville told Sky Sports.
‘I think there was an element of him thinking he could just put four players in that diamond and it would work after what happened in midweek but Scott McTominay on the right-hand side wasn’t working after five minutes.
‘You have to be comfortable moving out into that wide area; Aaron Wan-Bissaka’s already a bit awkward on the ball at right-back so you need someone to balance it and the balance on the right is a real problem for United.
‘When Greenwood went off it was even worse. They wanted Jadon Sancho obviously to play on that side and it looks like a real bad error in not getting that position recruited.
‘Changing systems, players, having plenty in one position and not enough in others is a real problem.
‘Manchester United’s full-backs aren’t the best attacking full-backs in the world.
‘Luke Shaw’s ok going forward, he gives a bit of balance, but you’re playing a diamond and your width’s coming from players who don’t really play that position well in terms of being high and wide.
‘It’s all looking a bit scruffy and towards the end, I’m not sure what shape United were playing.
‘He might have to make some tough decisions, Ole.
‘I thought Pogba needed to come off that left-hand side with Marcus Rashford going to the left and Edinson Cavani up top and Mason Greenwood to the right.
‘He might have to upset a few. He’s going to have to be selfish. He has to back certain players but ones that he doesn’t want, leave them out rather than trying to fit them all in.
‘He’s rotating from game to game to try and keep everyone happy but he’s going to end up losing himself if he’s not careful.’