The former Liverpool and Inter boss says that while the Football Association are trying to change things, they cannot disguise that they are still a long way off creating a system which enables the first XI to compete with Europe's elite.
The 52-year-old says the Three Lions must begin by first outlining a style of football from academy level right through to first-team, and then begin training coaches to be able to implement that system.
According to the Spaniard, a big weakness is the reserve team structure in the country, especially when compared to alternative models on the continent.
"For me, there is a very big weakness in the system when the players reach 18," Benitez told The Independant.
"At that age, a player in England who is not quite at the required level to play in the Premier League has to go off on loan to a League One or Two team, where it is very difficult for him to develop the basic skills in the way he would at his club. The style and standard of coaching will probably just not be the same."Those players who are of a slightly better standard but still not quite good enough to play in the Premier League will end up sitting on the bench, and could be stuck there for years."
And Benitez proposed that reserve sides should compete in the lower leagues.
"When I arrived at Liverpool, this problem struck me and I said that our reserve team should play in the Football League pyramid," he added.
"I wanted to use the experience of my years as a player and manager of the Real Madrid reserve team, which played in the Spanish second division.
"Joining the pyramid was important, but nobody wanted to hear or listen and I was told that I was going against an English tradition by suggesting this. I think people can see the problem a little clearer now."
The number of overseas players playing in the Premier League has often been blamed for England's lack of success at international level, but Benitez has dismissed that theory.
"I don't think England should be too worried about the number of overseas players in the Premier League," he continued.
"The country's young footballers can learn from those players, their different styles and ideas. And I don't think that the 4-4-2 system which Roy Hodgson used at the European Championship will prevent technically talented players being put to best use for the national side.
"The 4-4-2 style can become 4-2-3-1 when a team attacks. It's the football philosophy that counts, not the system."