I'm paying this man £2m. It's a lot, but he'll be worth every penny

'I have no interest in empty gestures towards business, of the type favoured by New Labour'

Last Monday I appointed Bob Kiley, the former head of the New York transit system, as the chief executive of Transport for London. The potential salary, linked to performance, of £2m over four years, is the highest ever paid in the public sector in the UK.

Last Monday I appointed Bob Kiley, the former head of the New York transit system, as the chief executive of Transport for London. The potential salary, linked to performance, of £2m over four years, is the highest ever paid in the public sector in the UK.

The reason for the appointment was simple - we carried out a search throughout the world and he was the best candidate for the job, possessing a proven track record of turning around the New York subway at a time when the transport system he led was the largest public carrier in the world.

The decision on salary was also simple. Having decided who was the best candidate, we would not allow money to become an issue. The only concern, given the extremely serious character of the transport crisis facing London, was to ensure that the financial package gave a strong incentive to complete the four years of the contract - which was easily agreed. Kiley's own inquiries were in a different area - to ascertain what resources he would have to carry through the remoulding of London's transport system.

A few criticised this salary. The real calculation is simple. If the new chief executive turns round London's transport, solving daily unpleasantness for millions of Londoners, and losses of billions of pounds for its businesses, it will be remarkably cheap at the price. It would be completely irresponsible to allow a salary issue to prevent London from having the best opportunity to solve the most difficult and serious infrastructure problem that it confronts. I therefore took the initiative to remove it from the table so that Transport for London could simply decide whether Bob Kiley was the right candidate to lead it, and he could evaluate whether he believed the job could be done.

The appointment, however, also symbolised the approach that I have taken as Mayor. While attracting less publicity than the most recent decision, attention should have been paid earlier to my appointments to the board of the London Development Agency (LDA).

I made clear in discussions with business organisations regarding this that there would be no compromise, that this board must be reflective of London, and that ample talent existed in the capital to combine strong business experience with a representative balance of gender and race.

This led to the appointment of, among others, Honor Chapman of James Lang Lasalle, Tamara Ingram, chief executive of Saatchi and Saatchi, Mary Reilly of Arthur Andersen, Yvonne Thompson, who is one of London's most prominent black businesswomen, and Lord Paul, all under the chair of George Barlow, who transformed the finances of the Peabody Trust. The board, from the point of view of business representation, is the strongest regional development agency in the country, but is 40 per cent women and 20 per cent black and Asian. I have taken a similar approach with London's buses. Yesterday I appointed as its director Peter Hendy, who started his career in London Transport, led a bus buy-out at the time of privatisation, and is now a deputy director of the First Group.

As with the board of the LDA, I have not the slightest interest in any parochial narrowness in selections. It is of no interest to me whether Bob Kiley is British, American, or any of the other several nationalities that applied for the job. I will use the best experience and expertise for London, selecting from any community in the city or in any part of the world. As has been said many times before, a guiding thread of my mayoralty is that globalisation has to be built into the foundations of what is the most internationalised major city in the world - London. This applies at every level, from inward investment and trade, through the multicultural, multi-ethnic character of the city, to the people who lead its most vital services.

Therefore, I have no interest in the type of empty publicity gestures towards business, of the type favoured by New Labour. Instead, real business experience is being brought right into the centre of my mayoralty and its delivery vehicles.

My goal is to use hard-headed business methods to deliver real social gains for the population. Regional and local government do not exist to create jobs for council workers, but to deliver services for the population. But equally, they do not exist to deliver captive profits to unaccountable private monopolies, as would occur with the Government's partial privatisation of the London underground, and has already occurred with the privatisation of the public utilities.

The aim is to deliver real benefits for the population. We must ensure that the appalling poverty that still exists in areas of London's inner city is tackled, that enough police can be recruited (which requires adequate salaries) to intimidate criminals, and that the transport system is reconstructed, not only in central London but in the suburbs. London must become a no-go area for racists.

These goals require that adequate resources are gained from the Government. It also means ensuring that every possible ounce of bureaucracy and waste is driven out. In short, that every pound that is paid out for services and personnel in London is repaid many times over in service delivered for the city.

Bob Kiley's salary, although the highest in any part of the Greater London Authority, is one that can have by far the highest multiple in returns for Londoners. It merely symbolises the culture of excellence and service delivery that must be created as a key to success.

The essence of business is not to avoid making any expenditures. It is to judge which investment will bring the biggest returns and then to make it. That is what the GLA is attempting to do.

Mr Kiley's appointment was an important example of the approach I am determined to take in everything to do with the Mayoralty.