Jeremy Warner's Outlook: No wonder the shares are motoring at M&S; there's still so much room left for improvement

De Beers opts for black empowerment; Regulatory obstacles to ScotPower bids; BG tempts fate with £1bn buy-back plan

Mr Rose is so filled with the cheer of it all that he's even managed to persuade George Davies to stay on as chairman of Per Una, the retail giant's main fashion range.

Less than a month ago, Mr Davies was being roundly portrayed as a volatile, greedy and overbearing ego whose services M&S could easily do without now that its own fashion choices are back in the ascendant. As Mr Rose remarks, three weeks is a long time in retailing, and now it is all sweetness and light again.

Cost cutting and improved supply chain management are meanwhile doing wonders for the bottom line, with profits again on a powerfully improving trend. Can Mr Rose keep it up? Retail spending, particularly in clothing, is still deep in the doldrums. Nobody is anticipating a buoyant Christmas.

But Mr Rose seems to have largely stemmed and even started to reverse the loss of market share, and although he's had to spend heavily on promotion to do so, he's more than made up for it with a much higher percentage of full priced sales than the company has made in many a long year. He's still a long way to go before he matches the return on sales achieved by Philip Green's Arcadia, but that only demonstrates the potential that is there for the taking if only Mr Rose can build on these early successes.

The real test will come at Christmas time proper. Meanwhile, Mr Green can only look on and weep. With the shares at 435p yesterday, they are now way beyond the £4 Mr Green was bidding a year ago last summer. Mr Green says he could have done much better for investors if only they had backed him. Yet if only he had held his nerve, it might have all been his, and he'd be paying himself a billion-pound cheque from M&S's coffers on top of the £1.3bn he's taking from Arcadia.

De Beers opts for black empowerment

Nicky Oppenheimer, the chairman of De Beers, billed it as the biggest ownership shake-up in the diamond goliath's 117-year history. In the event, it wasn't quite that, for the changes involve only the group's South African business, De Beers Consolidated Mines, leaving the larger rump offshore and untouched. Most of the original South African diamond mines have already been largely hollowed out - though for the time being they are still 29 per cent of group production - and today the great bulk of De Beers' assets lie outside the company's country of origin.

All the same, the agreement to sell 26 per cent of Consolidated Mines to a black economic empowerment company is resonant with history and symbolic importance. If Mr Oppenheimer hadn't done it voluntarily, he would eventually have been forced to by the South African government, which has made "black economic empowerment" rules on equity transfer a cornerstone of policies designed to shift South African wealth from its overwhelmingly white, minority owners to the black majority population.

Equity transfer is an entirely sensible policy in many respects, especially where it concerns the natural resources industry, which can legitimately be thought to belong to the people of South Africa as a whole but has had more than a hundred years of white exploitation.

Yet not for nothing is black economic empowerment frequently referred to as "black economic enrichment". Far from empowering the people, the effect all too often has been to enrich a small, politically well connected elite. In the De Beers instance the price being paid is quite a bit lower than outside estimates of fair value, yet how much of the benefit of these transactions trickles down to the population at large is open to question.

Other aspects of the black economic empowerment, such as positive discrimination in employment policies and measures to encourage the use of black suppliers, distributors and contractors, have been far more effective in achieving the desired result than the equity transfer rules.

All the same, it's a small price for business to pay if it helps create a black middle class with a vested interest in the rule of law. The all too possible alternative is revolution, mass expropriation and a Zimbabwean-style social and economic meltdown. Already there have been riots in some South African cities stoked by those calling for a speedier social dividend.

Where South Africa is getting it wrong, however, is in applying the same rules to direct inward investment. Equity transfer to black economic empowerment groups may be justified for existing white owned industries, but to insist that foreign inward investors give away a quarter of their equity too is economic madness.

There are reasons enough not to invest in South Africa - from high rates of poverty, disease and crime to still poor levels of education and training. To pile this on top is almost to instruct international business to invest in China and India instead. Cecil Rhodes, originator of the De Beers empire, would have found much to admire in the modern South Africa. Yet I'm not sure he would have set up shop there in the first place if he'd been forced to give away a quarter of his equity for the privilege.

Regulatory obstacles to ScotPower bids

Only one shopping day to go if E.ON of Germany is to pop ScottishPower into its bag before the Caledonian energy supplier produces half-year results tomorrow. The figures themselves will be a sideshow compared to the bigger question of who is going to buy ScottishPower. The Germans still look odds on favourites. If it comes to a bidding war, they have the firepower to outgun any other conceivable bidder, even if the regulatory obstacles look formidable.

E.ON, which already owns Powergen, would end up with 31 per cent of the UK energy supply market. Yet the only other obvious bidders, Centrica and Scottish & Southern, would have even bigger questions to answer.

A takeover of ScottishPower by Centrica would give the owner of the British Gas brand a 51 per cent market share - enough to make even the doziest regulator sit up and take notice. A tartan merger with S&SE , meanwhile, would command only 23 per cent of the UK market as a whole, but north of the border its share would be in excess of 70 per cent.

S&SE could play the national champion card - which might just be enough to take the minds of the Scottish Parliament off the horrendous job losses that would follow. But S&SE's Ian Marchant would still have the problem of trying to match E.ON's price and the disadvantage of paying in paper. The Germans are offering cash.

That said, a bid battle - even a phoney one - should not be discounted altogether. At the very least, S&SE and Centrica might by bidding persuade Ofgem and the Office of Fair Trading to pack the lot of them off to the Competition Commission, putting E.ON's ambitions on hold for at least six months while ScottishPower aimlessly drifted on. Something very similar happened when Wm Morrison bid for Safeway and the rest of the supermarket majors piled in. Sir Ken Morrison ultimately got what he was after but, four profits warnings later, a fat lot of good it has done him.

BG tempts fate with £1bn buy-back plan

BG Group may be tempting fate by announcing a £1bn buy-back so close to the pre-Budget report. The chief executive Frank Chapman is right to insist that his largess provides no justification whatsoever for a windfall tax on the "excess" profits of oil companies, especially as the buy-back represents no more than the return of proceeds from disposals to shareholders. Unfortunately for him, tax hungry politicians don't tend to see things that way. It's like a red rag to a bull. Whether the Chancellor can resist is open to question.

j.warner@independent.co.uk