London is one of the most important cities in the world, and I intend to sustain and consolidate this position.

During the 1980s and most of the 1990s Margaret Thatcher and John Major imposed a theory on London that the city’s problems could not be resolved through planning or conscious decisions to raise investment. Instead it was left to the market to ensure that the city functioned efficiently and effectively.

The legacy was the decline of public services and infrastructure, to the detriment not only of the city’s population but also to business and the economy. It is not just traditional Labour voters who have an interest in decent infrastructure in a city like London. Business needs reliable public transport or roads that are not congested in order for its workers to move around the city, to get to their jobs or deliver goods. It needs enough affordable housing for its employees so that there is not constant upward pressure on wages, and it needs the city to be safe, through adequate policing. The lesson of the Thatcher-Major period is that their theory did not work.

My policy has been to throw out this theory not for ideological reasons but because we needed to resolve the problems that built up under the Tories’ failed policies. The objective has been to raise investment in public services and infrastructure and to plan to cope with the growth in the population and the economy.

This policy is now bearing fruit – police numbers are up, congestion is being tackled, the bus service has been transformed, and public perception shows that Londoners believe the city is getting better.

The sheer size and scale of a capital where well over 300 different languages are being spoken at any one time means that it can reasonably claim to be the most diverse, most vibrant city on the planet.

London is, of course, one of the world’s most powerful financial and commercial centres. It has just been named the top destination in Europe for city breaks. Its cultural life is the envy of many.

The recent presentation of our blueprint for the 2012 Olympic Games has gained an excellent reception nationally and around the world. And the detailed outline of what a London Games would look like has created genuine excitement.

I believe there is a growing sense of confidence about London and its future. But we must not ignore the challenges that still face us.

A worrying issue for any major city is crime and fear of crime, and London is no exception. But the latest MORI poll of Londoners shows fear of crime in the capital has fallen significantly in the last two years, largely due to the introduction of more visible policing. This comes at a time when the Metropolitan Police has more police officers than ever before – compared to a decline in police numbers when Michael Howard was home secretary. And I will set aside more money for the Metropolitan Police Authority to allow the rise to continue. The Home Office also announced in December that this year’s grant allocation to the Metropolitan Police Service is £106 million more than the previous year at £1.93 billion.

The introduction of the Safer Neighbourhoods scheme sees new teams of uniformed police officers being introduced to tackle quality-of-life issues and the anti-social behaviour crimes that Londoners say make them feel unsafe. The new Metropolitan Police Commissioner, Sir Ian Blair, is committed to delivering this programme to every area of London over the next few years.

The safety and well-being of everyone who lives and works in London must be paramount. But the city also needs an infrastructure that’s fit for purpose. While London has had long-standing challenges, we are now taking decisions that will put in place the infrastructure the city needs.

Last year we reached a ground-breaking agreement with the Treasury which means that Transport for London now can borrow £3 billion to spend on the city’s transport network. This once-in-a-lifetime opportunity will reverse decades of under-investment and allow us to contemplate a £10 billion major investment programme.

This will deliver real improvements to services and our capacity to keep London on the move. Over the next four years, for a start, we will strive to extend the kind of improvements to the Tube that we have already made to London bus services.

Whether you walk, cycle or travel by bus or Tube your journey should become safer, more reliable and more comfortable. London will be a world leader for environmentally friendly and accessible public transport.

The congestion charge, nearly two years old, is evidence of the city’s new confidence. The reasons behind the charge were clear. A large capital city, London experienced increasingly congested roads – slowing down travel times and costing businesses.

The charge is widely recognised as a success. It has brought congestion down by almost a third, and made journeys more pleasant and reliable. The roads are safer. But more than this, the scheme has been truly pioneering, a measure never attempted before on this scale – an example of London leading the world.

The Olympic Games is one of the greatest prizes for any city, so it is no wonder that five are competing to host the 2012 Olympic and Paralympic Games. Our bid offers the best-ever games for athletes, a social, economic and environmental boost for our city, and the chance to showcase our unrivalled passion for sport in front of an audience of four billion.

Our bid is centred on the Lower Lea Valley, only a few miles from the heart of London. A purpose-built village will offer space for all Olympic and Paralympic athletes, and the games will leave a fantastic legacy of five fully-funded sporting facilities for London.

A London Olympic and Paralympic Games will be great for athletes, but will also be good news for London. The Lower Lea is at the heart of our Thames Gateway regeneration plans. It is an area with a history of social and environmental decline. That is going to change. Through bringing the games here, we will kick-start regeneration, achieving more, better and faster, and leaving a legacy of parkland – the biggest in any city in Europe for 150 years. Sporting facilities will be at the heart of this regeneration.

The British are often accused of having a pessimistic attitude towards big projects like hosting the Games. Over the past two years, we have seen a different attitude emerge, a sign of renewed confidence in our ability to change our city and our lives. London is completing major projects – such as the congestion charging scheme or the Channel tunnel rail extension – on time and to budget, and we can do the same for the games.

We can do it precisely because London, and Londoners, embrace change wholeheartedly. Take Trafalgar Square – a landmark known to people all over the world. Until recently it was surrounded on all sides by traffic but has been transformed into a world square to rival those in other great cities like New York and Madrid.

The real key to London’s success is perhaps this: how does a city of more than seven million people, in which over 300 languages are spoken, and more than a quarter of whose residents are from an ethnic minority, get along together so harmoniously? This is something of which every Londoner should feel proud.

But those who live in London can still sometimes fall foul of the British disease of talking ourselves down. However, if we stop and think about all that we have achieved and all that we plan for the future, then we realise why we should be proud to be a world class city.