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Labour's approach is that of targeting state benefit at those who

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Labour's approach is that of targeting state benefit at those who really need it, leaving the better off to provide for themselves. Mr Willets wants to get into a position where people are forced to save if they want income over and above the basic state pension.There are a number of problems with his approach. One is that people who are on the MIG will get progressively poorer in the short to medium term. Another is that at just 16 per cent of national average earnings, the BSP is still not enough to live on, leaving many of the 20 million who make no private pension provision below the breadline. A third is that maintaining the earnings link on the BSG over a very long period of time without raising the age of entitlement will require eventually unaffordable levels of government funding And so the objections multiply. These are mind bogglingly complex issues, which even Mr Willetts' famous two brains have failed to steer a clear course through..

There was further misery for shareholders in William Morrison Supermarkets yesterday, with the share price taking another lurch downward as one big institutional shareholder bailed out of the stock. Several fund managers, including Newton Investment Management, Baillie Gifford and M&G, have stakes of about that size.Investors were also bracing for miserable news from the banking sector. Recent trading updates have shown cut-throat competition and narrowing margins, and brokers are starting to focus on the forthcoming slew of interim results. A major theme this year: money market interest rates, at which the mortgage banks borrow to lend to their customers, have been rising fast in advance of the Bank of England's monetary tightening, but the lenders have to wait until actual base rate rises before passing on these higher costs. Northern Rock is always first out of the trenches and has its half-year figures scheduled for 20 July, so its shares were first in the firing line yesterday.

It also has the highest ratio of mortgage lending to customer savings, so it is most exposed to the margin squeeze. Its shares fell 10.5p to 693p on fears of a profits warning and after downgrades from UBS and Citigroup. Bradford & Bingley fell 3.25p to 264.75p and Alliance & Leicester dipped 12p to 813.5p. And some of the recent takeover speculation faded at Abbey National, which fell 2.25p to 485.5p. Investors are beginning to fret that even a giant programme of cost savings could not justify a Spanish or US bidder paying the current share price.With 10 banks accounting for 23 per cent of the FTSE 100 by market value, and none of their shares rising, there was no way the blue-chip index was going to end higher It closed at 4,370.7, off 32.6 points.

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