John McFall is the Labour MP for West Dunbartonshire and chairman of the Treasury committee. Last month, he announced he would not contest his seat at the general election.
McFall, 65, was born in Dumbarton and has lived there all his life. He studied at Paisley College of Technology (now Paisley University), the Open University and Strathclyde University. Before entering politics, he worked as a teacher, becoming deputy headmaster of a Glasgow secondary school.
He was elected MP for the then Dumbarton constituency in 1987 and has served as a government whip and under-secretary of state in the Northern Ireland office.
He has been chairman of the Treasury committee since 2001 and has been an influential voice on the banking crisis, once accusing the Bank of England of being “asleep on the job” before the crunch.
He was named the consumer champion of 2009 by Which?, the consumer group, for his role in improving financial services for customers. Together with Vince Cable and David Davis, he has set up the Future of Banking Commission, which is campaigning to reform the banking system.
McFall published the details of his £164,814 expenses for 2008-9 on his website in an effort to allow voters to make up their own minds about his claim. He was not ordered to make any repayments.
He is married to Joan and they have four grown-up children. He divides his time between Dumbarton and Westminster.
How much money do you have in your wallet?
It’s just spare cash for newspapers and lunches so usually about £20-odd.
What credit cards do you use?
I don’t use any. I took the advice of Matthew Barrett, the former chairman of Barclays, who once said at a meeting of the Treasury committee that he would advise his family not to use credit cards. Sound advice. So I have only a debit card with Barclays.
I don’t do packaged current accounts. I wouldn’t like to think I’d fall for the marketing. I’ve found that you’re paying for things you don’t use.
Are you a saver or a spender?
I err on the side of savings. My wife and I existed on a student’s income for years and we’ve more or less continued in that vein. I use up my cash Isa allowance each year but never increased it to reflect the new limits — I think I was too busy with all the banking issues. [The cash Isa allowance increases for everyone from £3,600 to £5,100 in April, having already risen for the over-fifties in October.] My wife looks after all my money and has done so for 40 years — she’s the chancellor.
How much did you earn last year?
The parliamentary salary was £64,766 and I get £14,366 for being chairman of the Treasury committee.
Was it right to bail out the banks?
I don’t think there was any other option. But we must ensure it doesn’t happen again — the public won’t tolerate a second bailout. The banks have said that if they are broken up, the City and the economy would suffer but now that Barack Obama has thrown down the gauntlet, that argument looks much weaker.
To date they’ve ducked their heads under the radar but I think they need to come up and engage in debate.
I think there are flaws in Obama’s approach, though, with complexity being the biggest one. That is partly how we got into the crisis — investors in banks equated complexity [of the products they bought] with security.
What’s your view on bankers’ bonuses?
There’s a need to get the service culture back into banking. Banks need to look at the big issues: compliance and ethics. I’m in favour of the payroll tax on bonuses in that it’s aimed at changing the culture of banking.
What financial products do you particularly dislike?
Payment protection insurance can be right for some people but the banks were selling it to everyone — it was an easy hit that made big profits. I went to my bank for a loan when I wanted to buy my BMW in 2005. I was asked if I wanted PPI. I declined but thereafter eight separate letters followed. This was crossing the line from the sales pitch to being almost intimidatory.
I don’t think the Financial Services Authority is doing enough to protect consumers. They are slow off the mark and it’s dismaying how long some issues take to resolve.
Have you ever been really hard up?
I bought a property in the 1970s. We had three children at the time and managed to get a three-bedroom semi for about £9,000 [£170,000 in today’s money]. We were delighted, but it left me with just £2.98 in my pocket. My father-in-law came to the rescue to make sure the kids had enough food that week.
Do you own a property?
Yes, we moved to our current property more than 30 years ago after having our fourth child. It has four bedrooms and I think we paid something like £40,000 for it. It’s probably worth £220,000 now.
What was your first job?
When I was 15, I worked as a garden labourer in the local park. I was paid something like £5 a week.
What’s the most lucrative work you’ve ever done?
Getting my parliamentary salary. I was a teacher for years and the pay was reasonable but with four children there’s never much spare.
Are you better off than your parents?
Most certainly. My parents owned a very small newsagent shop in Dumbarton.
Do you invest in shares?
No, I’ve never had shares. I came from a culture where it was not an option for people.
What is better — property or pension?
I think pensions are better, but we should be encouraging people to save more. The 401(k) portable pension arrangement in the US is attractive. It combines the portability of a self-invested personal pension in the UK with an employer-sponsored scheme.
It has its own issues, but I think the concept of a portable pension is good. Our pension system is too complex.
My pension is the usual MPs’ plan. [MPs have a final salary pension scheme from which they can draw at 65. Contributions are set at 10% and the current accrual rate — the proportion of salary received for each year of service — is 1/40th. This means MPs with 20 years’ service can retire on a pension of £32,383 a year. The average private pension in the UK is about £4,000 a year.] The issue of pensions is huge for everyone. MPs should have to contribute more and I think they are doing that for new members. Workplace pension schemes are changing and we need to reflect that.
What has been your best investment?
Meeting my wife and education. I left school at 15 but went back to studying a few years later.
What about worst?
Believing in certain politicians — particularly those in your own party — but I won’t name names.
Do you manage your own financial affairs?
Yes, but I have an accountant because as an MP you want to make sure everything is proper and correct.
Do you think it was right to clamp down on MPs’ expenses?
There’s no doubt that the system needed changing. The more open and the more transparent we are the better.
What’s the most extravagant thing you have ever bought?
A BMW 525d. I’ve a friend in the car business and he sold me a three-year-old model for about £15,000 — they cost £33,000 new. It’s my pride and joy. I’d crashed my previous car while I was touring the constituency canvassing votes.
What’s your money weakness?
Gadgets — I am a salesman’s delight. If I see an item, I usually take the most expensive and the most complex.
What aspect of the tax system would you change?
The divide between rich and poor is getting greater and I would like to take people on the lowest incomes out of taxation.
What’s the most important lesson you’ve learnt about money?
Money can’t buy you love, as The Beatles said. And a bargain is not a bargain unless you need it.