In 2005, McCarthy was selected as the Labour candidate for Bristol East through an all-women shortlist and retained the seat for her party at the 2005 general election. She was appointed a member of the Treasury Select Committee, and was involved in its inquiries into financial inclusion, globalisation and the role of the International Monetary Fund, and the administration of tax credits. She has also sat on two Finance Bill committees, as well as the UK Borders Bill Committee, the Offender Management Bill Committee and the Mental Health Bill Committee. She was described as a Gordon Brown loyalist, stating in 2005 that "The Chancellor's nine Budgets are the bedrock of all that we have achieved in government".