Scholes has admitted that he had concerns before the World Cup started over England's defensive capabilities and has said that Roy Hodgson must make changes going forward.
"Going into the tournament we all feared the back four were never not going to concede goals – and now it has been proven," he told Paddy Power.
"England just weren't good enough. I thought they were poor in the first half and gave the ball away too much.
"Roy's close to finding something – but he needs two young centre-halves that have the balls to play, the balls to step into midfield now and again and full-backs who can defend."
Scholes scored 14 times in his 66 appearances for the England national side.