Your "P Channel" Mosfet is turned on all the time. If the gate cannot go to the source voltage, it cannot turn off. A P channel Mosfet is turned on by pulling the gate below the source voltage. In this case the Vcc for the selector chip is 5 volts and the Source voltage for the Mosfet is 12 Volts therefore the gate is always at -7 volts in the off state (relative to the source voltage thus fully enhanced or turned on as Vgth is about -2 / -3 volts. I would suggest you draw an accurate schematic and carefully analyze each part as to function. If you wanted to turn on the P Channel Mosfet from the 5 Volt logic you are using then you need an NPN transistor (a 2N3904 is ok), collector through a 10K resistor to the gate of the Mosfet, emitter to ground, leave the pull-up you have on the gate as Mosfets don't suffer from the base emitter leakage that bipolar transistors do but the gate is very a very high impedance input and must be protected from external leakage and noise from other circuitry so a pull-up is required. Use a 10 K base resistor to the '595 output pins and when a selected output goes high it will pull down the gate down and turn on the Mosfet placing the source bias voltage on the drain. You could of course use an N channel Mosfet in place of the NPN transistor, a 2N7000 would work well but there is no electrical requirement for a Mosfet. Your schematic has some serious errors in it's logic. IMO
Doc