The BBC must drop its "we know best" attitude and start listening to criticism, the Government has warned in response to the damning report into Martin Bashir.

In a strongly-worded statement, the Government said it would use the mid-term review of the BBC’s Royal Charter to determine whether governance and regulation of the corporation should be strengthened.

"It is the Government’s belief that the BBC must act fast to restore trust and reassure the country that it will shine a light on any other areas falling short of the high standards we rightly expect of it," the Government said in a statement to the Digital, Culture, Media and Sport select committee. 

"The BBC needs to improve its culture to ensure this never happens again."

Demanding "a new emphasis on accuracy, impartiality and diversity of opinion", the statement said: "The Government notes that the BBC can occasionally succumb to a ‘we know best’ attitude that is detached both from criticism and the values of all parts of the nation that it serves, and believes cultural change must be a focus for the director general and new chair on the back of the Dyson report."

The report found that the BBC’s investigation into Bashir, who used faked documents in pursuit of an interview with Diana, Princess of Wales, was "woefully ineffective".

At a DCMS committee hearing earlier this week, MPs told Lord Hall of Birkenhead, who carried out the flawed investigation, that the episode represented not just a failure of management but "a failure of morality".

Meanwhile, Earl Spencer said he was baffled that the police appeared reluctant to investigate Bashir’s behaviour, telling LBC Radio on Thursday: "I have referred this twice to the Metropolitan Police. They seem bizarrely reluctant to take it further.

"If you went into any situation with fake bank statements and profited from it, you wouldn’t expect to get off scot-free and nor would I. This seems a very odd case indeed."

Earl Spencer said felt "disbelief" upon reading a BBC review which concluded that Bashir was re-hired as religious affairs correspondent in 2016 because he was the best candidate for the job.

He added: "I don’t think it’s healthy for an institution to report on itself. They found no connection between Bashir being rehired and his previous known lies and other things… Why would you choose somebody who you know has caused such trouble? So this isn’t a crusade of mine. I just find it unbelievable."