IMO, you need to completely replace the knuckle (the bit that the caliper bolts to and that the lower arm ball joint goes into) as it appears to be worn. A good second hand one will do there.

Its not a bad idea to have brand new Ford Track Control Arms while you are at it and then a decent wheel alignment. The arms are around £45 each from Ford and come with new Pinch bolts/nuts and Bushes.

Better still is to Poly Bush the front end too. But it depends on how far you want to go.