London-based museums need to ensure they reach every part of the country, according to Lisa Nandy, the culture secretary, who on Wednesday announced a landmark £1.5bn funding package for the arts meant to restore national pride.

National museums including the British Museum and the National Portrait Gallery will be handed a £600m package but the culture secretary has urged them to look outside the capital to extend their sphere of influence.

“Almost all of our national institutions are based in London, which means they need to work harder to make sure that they are genuinely national institutions [by] opening opportunities for young people from every part of our country,” she said.

Nandy praised the outreach work of the Royal Shakespeare Company as an example of how national institutions could engage visitors across the country. “I’m saying to institutions: ‘We are building the doors, but now you need to throw them wide open to the whole community,’” she said.

The funding package is primarily designed to repair the UK’s creaking cultural infrastructure, and Nandy said it was the biggest reset in the arts for a generation. It represents a huge injection into a sector where Arts Council England (ACE) funding was cut by 30% in 2010, and follows a previously announced £270m.

Nandy said: “We’re investing in every borough in the country because arts belongs to everybody and we are determined to ensure that wherever you live in the country, whatever your background, access to arts and culture belongs to you.”

She said she believed this moment was comparable to the aftermath of the second world war, “when a generation of visionaries stepped forward and used the power of the arts to help light the way forwards for a very fractured, devastated notion”.

The package also includes £160m to be invested in local and regional museums, and a £425m Creative Foundations Fund, which will be managed by ACE and will support about 300 capital projects at arts venues across the country.

The heritage sector will get a further £230m, while public libraries can apply for £27.5m and national portfolio organisations will have an extra £80m available over the course of this parliament. Local and regional museums will get £160m.

Darren Henley, the chief executive of ACE, said: “By continuing to fund our cultural infrastructure, the government is investing in our collective future in ensuring creative opportunities for generations to come.”

While the plan was welcomed across the sector, there were dissenting voices. Mike Clancy, the general secretary of the Prospect union, said that package was wrong to focus solely on bricks and mortar institutions rather than those employed in the sector.

He said: “Our culture is not just about artefacts, sites and buildings but about the people who bring it to life. This sector is facing an ongoing and intractable crisis in pay and retention which has to be addressed.”

Nandy praised a recent review of ACE by Margaret Hodge, which found there had been a “loss of respect and trust” for the council among those it backed, in part because of “perceived political interference in decision-making”. Hodge called for the scrapping of ACE’s “let’s create” strategy, which was due to run until the end of the decade.

The culture secretary hinted she would back the recommendations when she officially responds in the next month, calling it “a really welcome shake-up of a sector that has been underfunded, undervalued and underutilised for too long”.