His master's voice

Published on Saturday 16 February 2008 14:08

INTERVIEW: JOHN McFALL

WESTMINSTER is all about power and influence. Surprisingly few MPs and ministers actually have real sway over events; most backbenchers like to show that they have clout, but they are fooling no one.

There is one backbencher to whom the Government listens, who calls to account the Chancellor of the Exchequer and the governor of the Bank of England, who makes the big beasts of the City squirm when they appear before him and who mauls the financial fat cats. John McFall, after a stop-start political career (which included, in the opinion of well-placed friends, being 'stitched up' by Tony Blair), has finally come into his own as chairman of the Commons Treasury Select Committee.

A week after Chancellor Alistair Darling presents his Budget on March 12, he will appear before McFall's committee to be grilled on the Government's management of the economy and the Bank governor appears four times a year to justify bank-rate decisions.

The office of the Labour MP for Dunbartonshire West confirms his status: while other MPs struggle to find space, he has a spacious suite on the first floor of Portcullis House, opposite the Parliament.

In the wake of the Northern Rock debacle and the recent succession of international financial emergencies, the former schoolteacher has led the investigations which produced reports scathing of the bankers' folly and the complacent inactivity of supposed watchdogs and on radio and TV regularly delivers hard-hitting critiques of financiers and authorities who fail their ordinary customers.

Even before Northern Rock precipitated the first bank run in the UK since Victorian times and sub-prime mortgages caused quakes in the money markets, McFall and his committee appeared to be at war with the financial community. When he took over the chairmanship, he set out his stall to champion the consumer and the bosses of big banks, insurance companies and pension funds found themselves answering hard questions about consumer horror-stories.

Formerly chummy appearances before the Treasury Select Committee became ritual humiliations with blunt accusations of "slick salesmanship", McFall asking a question 14 times until he got an answer from a multi-national bank's chief executive and one executive complaining he had been subjected to "a courtroom inquisition". Giving evidence on Northern Rock, the chairman of the Financial Services Authority was told his organisation is "a watchdog that didn't bark". Previously, his chief executive was given the ex-headmaster treatment: "You were not just sleeping, you were comatose. Discuss." A 20m pay-out on split capital investment trusts came after one of the creators admitted he did not understand the muddle himself.

Critics say McFall's brusque and brutal approach has contributed to the public cynicism about financial institutions but he would counter that is no bad thing. The admittedly left-of-centre McFall insists he does not hold City slickers in contempt, yet talks dismissively of "whizz kids with PhDs" who design impressive mathematical models for financial institutions which then collapse. In a memorable assessment of actuaries and advisers who did not warn of a slump, he commented curtly: "A monkey could have predicted what would happen."

The no-nonsense language comes from a background which includes leaving school without a Higher and jobs in the local parks department and a factory before starting a degree in chemistry at Paisley College at the age of 24, followed by an Open University degree in education and a night-class MBA at Strathclyde University, where he is now a visiting professor: "I was teaching by then but I wanted to get an idea of wider management issues and policies. It was a bit unusual for a schoolteacher and it has been valuable in helping me understand the principles of business and finance."

He admits: "When I got this job I was very much aware that I was neither an economist nor a City person. It was like being at university again doing a degree. You have got to drill down and get to the core of every issue.

"I've learned to start out with suspicion and you have to be critical of any marketing by investment banks and others that says they know what they're doing. They have let a lot of people down and have got a lot of savers into trouble."

A union and Labour Party activist, there was some resistance when he was asked to become the local MP: "I had a good job as a deputy headmaster in a comprehensive and there was a reluctance to go to the hot air factory at Westminster."

He became a frontbench spokesman on Scotland and was an opposition whip until resigning in protest at Labour's support for the first Gulf War. When Blair (for whom he voted as leader) won power in 1997, he seemed to be on the rise again as a Northern Ireland minister but the job was redundant when Stormont was set up and Blair did not make room for him elsewhere. Colleagues suggest that McFall, a radical conviction politician with a reputation for forthrightness, was not comfortable in office.

"At the end of the day, I have to go back to my constituents in Dumbarton and it is them I am really working for," he says. "I may be talking about billions down here but what keeps me in office as an MP is making sure there's a few thousands pounds for a community centre or a few extra pounds a week for a constituent in need.

"A lot of people are still struggling there and it is important, for instance, that we keep the Government under scrutiny and prevent them resiling from our target of ending child poverty in this country by 2010."

He is chairman of Strathleven Regeneration Company, a non-profit making company he set up after the closure of the J&B whisky plant to create new jobs and an early success was attracting the BBC's production site for the River City soap opera.

But it is the Treasury committee that has given him a profile higher than most ministers and he points out: "As an MP or a minister, you will be judged on achievement and the record shows that I've been able to influence outcomes in favour of ordinary people. That's why we're all in politics, isn't it?"

Last year, McFall was awarded the first Citizens Advice Parliamentarian of the Year award for leading the campaign on credit card information, affordable credit and financial inclusion by securing the installation of over 500 new free-to-use cash machines in low income areas throughout the UK despite huge reluctance by the banks.

Despite the confrontational reputation, the ATMs deal was done in behind-the-scenes negotiations with the financial institutions and the same approach is paying off on the controversial issue of 'inherited estates', also known as 'orphan assets', the huge surpluses lying dormant in life funds. Norwich Union has announced it will pay out 5.2m to its stakeholders and others will be forced to follow.

Says McFall: "It is estimated that 20-25bn is being held back across the whole insurance industry and the Pru alone has 9bn. There is a lot at stake here and the consumers have to get their fair share."

Also on the committee's agenda are tighter regulation, free banking and unfair charges: "When the banks came before us, I asked how they could be imposing these charges, why a customer could end up with a charge of 25-30 for a single transaction that is really part of the service. A bank chief earns in excess of 3-4m a year but to many people a 35 loss is a disaster and if that mounts up because of charges, they may find themselves in financial straits for years."

McFall will give up the committee chairmanship at the end of this parliament, still plenty of time to discomfit "slick salesmen" and make more enemies in Whitehall and the City. Not that he seems to care.