The government is to scrap a key scheme designed to tackle gang violence, prompting a warning that the Home Office should not “put a price on the lives of our young people”.

The Ending Gang Violence and Exploitation Peer Review Network was set up by the Home Office after the 2011 riots and brought together police, academics, former gang members and experts to help local areas develop strategies for dealing with gang culture.

In a leaked letter from the Home Office to local authority staff involved in the scheme, the department said the “frontline team support and associated funding will be ending at the end of March” and that it would “not be offering any further centrally funded peer reviews or local assessment processes in the next financial year”.

Chuka Umunna, MP for Streatham and former shadow business secretary, described the step as retrograde and said it would “seriously compromise” efforts to reduce gang and serious youth violence. “If it is being done to cost-cut, I say you cannot put a price on the lives of our young people,” he said.

Umunna said the network was not being replaced with “anything meaningful” and that a couple of civil servants with no expert knowledge would have responsibility for the issue added to their existing work.

Chuka Umunna said: ‘If it is being done to cost-cut, I say you cannot put a price on the lives of our young people.’ Photograph: Anthony Devlin/PA

Umunna said there needed to be an increased focus on hard-to-reach youngsters who were out of work and that a disproportionate number of young people who are affected by the problem of gangs and youth violence were of an ethnic minority background.

The MP argued that the lifestyle that goes with gang violence was promoted and glamourised in popular culture and that this needed to be offset with a programme “to win this argument amongst our young people”.

Speaking in parliament on Friday, Umunna said one of his constituents, whose two sons who had been caught up in gang violence in the area, wanted the family be allowed to return home to Somalia, from where they had fled as refugees.

“He is completely bewildered by what has happened and when I asked him whether he felt his sons would be safer in Mogadishu than in London, he told me it would be less dangerous for his children to live there than here,” said Umunna. “He massively regrets moving them to this capital city of ours. That is a damning indictment of the situation on London’s streets.”

The MP, who briefly threw his hat in the ring to be Labour leader after the general election, also said that cuts to local authority budgets were limiting the effectiveness of work to tackle gang violence.

“It is impossible for local authorities, whose grant from government is being cut by 56%, to do this work without being provided with adequate resources to do it,” he said. “In the end, investing now in our young people will mean you have to spend far less than you would if they go through the criminal justice system later.”

In the leaked letter, the Home Office claimed that “great progress has been made over the past four years in tackling gang and youth violence issues” and that the department would be setting up a new forum to “harness the expertise of as many of you as possible” to tackle the issue. The Home Office had not responded to a request for comment at the time of publication.

Deborah and George Kinsella, the parents of murdered teenager Ben Kinsella who have become two of the most high profile campaigners on knife violence, said they were deeply concerned by the cuts.

“We are extremely disappointed to hear that the government is making further cuts to funding to tackle serious youth violence when there are so many of us trying to make things better for others after losing our own children,” the couple said.

“The problem has certainly not gone away. Fifteen teenagers were killed in knife attacks in London last year which is the most that we have seen in a year since the awful year when Ben was killed in 2008. We need investment in tackling these issues now before more lives are lost and more families left to grieve.”

June Addai, the grandmother of 17-year-old Marcel, who was murdered after he was chased by a gang of up to 15 people on a housing estate in Hoxton, said the government should be increasing, rather than cutting, the funding keep young people away from the lure of gang culture. “I think it should be a priority for them, a top priority,” she said.

“The government seem to be cutting everything. Children have nowhere to go, they need clubs to go to rather than hanging out on the streets where they can get into trouble. They get left behind.”