PHOTO: AFP
Southgate on Thursday included uncapped Liverpool defender Joe Gomez in an experimental 25-man squad for England's friendlies against Germany and Brazil later this month.
Chelsea's Gary Cahill, Manchester City's John Stones, Harry Maguire of Leicester City and Smalling's United teammate Phil Jones also made the cut at centre-back, but not Smalling, who has been capped 31 times.
Asked if he felt Smalling was incapable of playing the ball out from the back correctly, Southgate replied: "No, I think he can. We have players like Stones and (Eric) Dier and Maguire who are even better."
Explaining his reasoning for snubbing Smalling, he added: "Chris has got 30 caps, he plays for Manchester United, so I know what he can do. The other guys I want to see and want to look at and that's an important part of how we want to play, building from there.
The decision wasn't an easy one to make as Southgate explained: "That's probably the toughest call I've had to make because of the team that Chris is playing for and the fact he's playing and keeping clean sheets. We had the best defensive record in Europe in qualifying. But we're nowhere near the highest scorers. Part of that is being able to build and create chances."
Southgate also handed out first call-ups to Chelsea youngsters Ruben Loftus-Cheek and Tammy Abraham, who are on loan at Crystal Palace and Swansea City respectively.
But there were some high-profile absentees, among them Smalling, Arsenal midfielder Jack Wilshere and the Liverpool pair of Alex Oxlade-Chamberlain and Daniel Sturridge.
Southgate said midfielder Oxlade-Chamberlain, who joined Liverpool from Arsenal in a £35 million transfer in August, would not easily fit into the 3-4-2-1 system he wants to adopt.
"He suffers slightly from the change of system because of the way we want to go," Southgate told reporters at Wembley on Thursday. "He becomes a possibility at wing-back, but I think [Kieran] Trippier was outstanding last night (in Tottenham Hotspur's 3-1 win over Real Madrid), Kyle Walker excellent (in Manchester City's 4-2 win at Napoli).
Tottenham Hotspur are adept exponents of the 3-4-2-1 formation, as demonstrated by their stirring 3-1 win over Real Madrid in the Champions League on Wednesday.
Southgate was an impressed observer and believes the English clubs' strong showings in the Champions League — with Spurs and Manchester City already through to the last 16 — could have positive benefits for England.
"Those teams have obviously also got good foreign players around them, but they're absolutely the nights that we want our players involved in," said Southgate, whose team finished top of their World Cup qualifying group. "It's a great grounding for them to be playing in big Champions League matches. It looks like they're all going to go into the knockout stages now."
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