Henry guided New Zealand to victory last October in stark contrast to England who endured a miserable World Cup, crashing out in the quarter-finals with their campaign marred by a number of off-field incidents.
Coach Martin Johnson subsequently resigned to be replaced by Stuart Lancaster on an interim basis.
Henry believes England have good attacking players but questions whether they can ever fulfil their potential as long as they persist with their present approach.
He told therugbysite.com: "England has top-draw attacking players (but) they are seldom used.
"It sometimes seem that England are world champions at wasting talent.
"At national level and at club level English teams are far too worried about securing possession.
"No wonder England had trouble scoring tries against the better teams at the World Cup."
He singled out Ben Foden, Chris Ashton and Delon Armitage as players who has impressed him but believes they may never reach their potential.
He added: "A country with over a million players should be the best team in the world and England's potential in the backs is as good as it has ever been.
"But how frustrated those players must get in a white shirt.
"England and the English clubs played a game based on fear and a generation of promising backs are dying on their feet.
"That has to change."
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