Livingstone supports private funding of public services

Ken Livingstone, the Mayor of London, last night gave his backing to a report which says that the private sector will have to provide more than half the £110bn of investment needed by the capital's public services over the next 14 years.

The report calculates that as much as £66bn of the £110bn will have to be raised privately. The private sector will have to be relied on for £31bn to £33bn of funding for the transport system, £6bn to £6.5bn for education and as least £2bn for health.

Despite his well-known opposition to the Public Private Partnership for London Underground, Mr Livingstone said that PFI funding might be appropriate to meet some of the funding needs identified in the report by the business lobby group London First.

"Whatever the precise form it takes, the fundamental reality is that the huge scale of investment London requires can only be delivered when the private and public sectors work hand in glove," he said.

The population of London is forecast to grow by 700,000 – equivalent to a city the size of Leeds – by 2016, taking its total population to 8.1 million. This will necessitate a 40 per cent increase in rail and bus capacity, 30,000 to 43,000 new homes a year, an additional 130 new schools and 14 more privately-funded hospitals. The rapid expansion of the capital will create 600,000 new jobs – 460,000 of them in financial and business services.

"The unprecedented growth represents enormous opportunities," the report says. "Properly managed it will reinforce London's status as a world-class city and financial and business centre. Mishandled, it could have sever implications for the whole of the UK."