From the point where each vertical edge was at Arrow 1, in edit mode you can shift-select each of those inset vertical edges, and then hit s to scale each edge and push them inwards. That will move just those edges and their vertices all inwards (or outwards) symmetrically.
If you're already at Arrow 2 and can't go back, from edit mode you can select each horizontal edge at Arrow 1, hit "x" to bring up the delete sub-menu, and select Dissolve Edges to eliminate them. You can then scale the vertical edges at Arrow 2 using the process above to move them without creating any new edges.
Does this accomplish what you were trying to do?