The UK culture secretary, Oliver Dowden, has said the BBC needs far-reaching change, accusing the broadcaster of adopting a “we know best” attitude in the scandal surrounding its Panorama interview with Diana, Princess of Wales.

Dowden said Lord Dyson’s report, which found Martin Bashir used “deceitful conduct” to obtain the 1995 interview with Diana, had exposed “failures that strike at the heart of our national broadcaster’s values and culture”

Dyson, a former master of the rolls, found Bashir’s actions were then covered up by a “woefully ineffective” internal investigation.

Writing in the Times, Dowden said far-reaching change was needed to ensure the corporation was in tune with “all parts of the nation it serves”.

He said the BBC’s leadership was too narrowly drawn – succumbing to “groupthink” – and that “cultural change” was needed in the organisation.

“The BBC can occasionally succumb to a ‘we know best’ attitude that is detached both from the criticism and the values of all parts of the nation it serves,” he said.

“Groupthink in any organisation results in a lack of challenge and poor decision-making. That’s why cultural change must be a focus for the director general and new chair.”

Dowden said the BBC needed “to improve its culture to ensure this never happens again and that means a new emphasis on accuracy, impartiality and diversity of opinion”.

His remarks came after the home secretary, Priti Patel, refused to rule out the prospect of criminal prosecutions after Dyson’s findings. She told Sky News: “If there is subsequent action that needs to be taken, then clearly … that will follow.”

With the BBC facing a midterm review of its charter next year, Dowden said the government would not be rushed into “kneejerk reforms”, but it would not “stand idly by”.

He suggested the only way the BBC could justify its funding model was by providing distinctively British programmes.

Dowden said it needed to “step up to project British values and distinct quality programming with renewed vigour and ambition as our national champion”.

The release of the report prompted the former BBC director general Lord Hall to quit as chairman of the National Gallery. He was head of news and current affairs when the BBC carried out the 1996 internal investigation into the way the Diana interview was obtained.

MPs are expected to press for answers as to how Bashir was rehired by the BBC in 2016 as religious affairs correspondent – later promoted to religion editor – even though it was known he lied to the internal inquiry.

There have been calls for compensation for BBC whistleblowers whose careers suffered after they tried to raise concerns about the way Bashir operated.

Bashir said he was “deeply sorry” to the dukes of Cambridge and Sussex but disputed William’s charge that he fuelled Diana’s isolation and paranoia.

He told the Sunday Times: “I never wanted to harm Diana in any way and I don’t believe we did. Everything we did in terms of the interview was as she wanted.”