Question: What are you hoping to see Gordon Brown announce in the forthcoming Budget?

John McFall: One of the big issues that the Labour government has focussed on since 1997 is delivery of public services. Everyone knows we have a long way to go to provide the level of service we want. I would like to see what I call a see-through budget. That is, transparency between the money pledged and the results on the ground. Also, it is less than useful if we have higher spending on different policies and departments without the necessary reforms.

On the political front I would like to see the Chancellor build a progressive consensus on issues that cross party lines, similar to the post war period in the United Kingdom when broad agreement on a range of issues gave rise to the term Butskillism. During that period the National Health Service, in particular, was an issue that was at the core of every party's concerns. I would like to see a new consensus focussing priority on the NHS, on poverty and also on the issue of full employment.

In a significant speech on the NHS to the Social Market Foundation Gordon Brown made it very clear that the NHS should continue to be funded out of public taxes. This is perhaps the dividing line between the Labour Government and the Conservative Opposition. The choice is between a publicly funded system or one that involves either Euro charges, private insurance, social insurance or a combination of these. I would prefer to see a consensus of opinion that the way ahead for the NHS is through public funding.

On poverty, we still have a lot of pensioners who are very poor. The top 20 per cent of pensioners live on an income of above £20,000 per year, whereas the bottom 20 per cent, up until the new provisions were introduced last year, were on minimum income support level. Such inequalities need addressing. The new Pensioner Credit will go some way to reducing these inequalities. But an increase in pensions for the poorest pensioners is still needed.

Pensioner Credit, or tax credits to assist working families, employment credits or children's credits, are all extremely important. There are still too many children and families living in poverty and social exclusion and financial exclusion are very relevant to today's society. Gordon Brown will be announcing the rates of two new tax credits which greatly assist in the battle against poverty - the Child Tax Credit and the Working Tax Credit. To date, people have been insufficiently aware of what these benefits have to offer and their entitlement to them. Simplicity is required when explaining the nature of these benefits to the public, otherwise people in the target group may not understand the credits and, therefore, not claim them.

The issue of full employment is also crucial. To achieve and maintain it we need economic stability and greater productivity. To promote productivity we need a policy framework which encourages macro -economic stability and we also need more competition. I would like the Chancellor to really address these particular issues, because the productivity figures we have in the UK are disappointing when we compare ourselves to the US and other countries in Europe. On growth, UK rates is still only half of that in the USA.

Question: Some people argue that the Chancellor has got too involved in the detail of full employment and welfare reforms and that the Treasury should keep out of the detailed delivery of these policies and leave that to the Department for Work and Pensions. What do you think?

John McFall: I think you need to look back to 1997 to what the Government inherited. As I indicated previously, many more pensioners were very much financially excluded and for many families and children poverty was an everyday reality. In 1997, 4 million people were on low incomes and 40 per cent of children were born into low income families. So I applaud the Chancellor in attempting to redress that situation. However, I think there will come a stage where a lighter touch from the Treasury is required and where micro-economic tinkering will become a thing of the past - but that position hasn't been reached yet.Question: Some people argue that the Government has leaked the contents of the Budget in drips and drops to the newspapers over recent weeks. Do you believe the Chancellor has breached a Budget purdah?

John McFall: No I don't think so. I believe he's outlined his ambitions in the pre-Budget report and he's simply following on from that.

Question: The Chancellor has presided over quite a few Budgets now. How successful has he been in reforming the tax system?

John McFall: I think we still have quite a long way to go in reforming the tax system and ensuring that the tax and benefits system are integrated. This is what he is trying to do with his tax credits .

Question: If you talk to small business one of the biggest obstacles they say they face is from banks. How concerned are you by the way banks are treating small businesses?

John McFall: The Competition Policy report is out. I have its four majestic volumes in front of me as we talk at the moment. It is obvious small businesses haven't received a good deal. Government commissioned reports have indicated that excess profits of the order of 3 - 5 billion pounds have been generated from small business banking markets in the UK.

In the next few weeks the Treasury Committee will be inviting the Federation of Small Businesses and others to give their views as to how they see the way forward. I think change is required in the banking system. I am very impressed by the US system. During a committee visit to the US at the end of January I met Bill McDonough, the Chairman of the New York Federal Reserve. We discussed aspects of the 1977 Community Reinvestment Act in the US and he said if the banks had been doing their work we wouldn't have needed the Community Reinvestment Act.

Question: From your visit to the US do you think banks should be looking more to the US system for inspiration?

John McFall: Now I know it is not a straight read-across between the US and the UK, but I think we need to have a wider look at the banks and the financial services and their obligations to the communities in which they exist and from which they take their profits. Corporate responsibility is very important and it is something my committee will be taking a closer look at.

The last time Sir Edward George appeared before my committee I told him that I thought the MPC remit was far too limited and needed to be widened to allow it take on a broader perspective. However, he did need agree with this view.

Question: The banks would argue that a careful balance needs to be struck here because too much regulation could affect their international competitiveness?

John McFall: That's correct, but one of the issues that was brought up in the Competition policy report was that there is not enough competition in the banking sector. If you look at comments from companies like the Bank of Scotland and Abbey National, you will see that they agree with that view. The industry is controlled by the big four banks. The more competition there is the healthier the situation will be. That is also true of the wider economy. A recent study by McKinsey into the US economy found that the huge increased productivity after 1995 was largely due to fierce competition in the market.

Question: The Financial Services Authority became the super regulator for the financial services industry back in December last year - how do you think it has been getting on in its role?

John McFall: I think they have had to face a mammoth task and, largely speaking, they have tackled it reasonably well. However, because they have only had this responsibility for a short time, it has only scratched the surface and any change to date has been on a superficial level. There have been plenty of press releases and policy position papers produced, but few solutions to the problems which exist have been provided yet.

When you are talking about financial services you must look at consumers and their expectations. I believe the consumer of financial services presently feels badly let down, particularly with regard to Equitable Life, Independent and other scandals. This has cast a dark shadow over the insurance markets.

Question: Do you believe there is still an issue of mis-selling or misleading advertising in the financial services sector?

John McFall: I wouldn't say the big issue at the moment is mis-selling. I think the major problem is to do with public education. People still get very confused when they buy financial products. I believe the public education remit the FSA carries out needs to be substantially enhanced over the coming months and years.

There needs to be much more education about endowment mortgages and with-profit policies. These have not been performing well in the past few years, principally, but not exclusively, due to the fall in the stock market. The situation affecting mortgage endowments and Market Value Reductions will get worse before they get better.Question: The FSA will receive responsibility for regulating mortgage sales later in the year - bit isn't there an argument that this remit should be extended to cover mortgage advice?

John McFall: I think it is essential that this remit should include mortgage advice.

Question: Something else your committee will be looking into over the next few months is the Enron affair - what are your key concerns in this area?

John McFall: I can only quote Howard Davies who in a speech he made to the World Economic Forum in January in New York posed the question 'could there be a large scale unpredicted corporate failure in the UK?' He said the answer to that question is 'yes'. It is appropriate, therefore, that the Treasury Committee look into the implications for the financial markets of the wider issues that have arisen from the Enron affair. Already we've had many responses from organisations and individuals who wish to give evidence to us.

I think Enron has raised very big issues for the accountancy, banking and the legal professions, as well as for management and governance. Make no mistake, this is the biggest crisis the accountancy profession has faced in its history. It won't go away without a thorough examination of practices in these areas.

On corporate governance the issue of non-executive appointments needs careful analysis. How many non-executive appointments can an individual handle sensibly? Is it desirable for executives to take on more than one non-executive appointment with another company? Frankly, I cannot for the life of me understand how people who have multiple non-executive directorships can provide a proper service to the companies and shareholders. The role and responsibility for non-executives needs to be looked at afresh. The credibility of many groups are at stake here.

It is obvious that the Treasury Committee will be provided with a large canvas to work on over the coming months.