Carr was a supporter of the European Economic Community, and was amiable to Edward Heath's election as Conservative Party leader in 1965, even though he had supported Maudling.[1] When Heath became prime minister in 1970, he served as Secretary of State for Employment and was responsible for the modernising Industrial Relations Act 1971, which balanced the introduction of compensation for unfair dismissal with curbs on the freedom to strike and the virtual abolition of closed shop agreements. The Industrial Relations Act 1971 was deeply disliked by trade unions, whose industrial action lead to the three-day week and ultimately to the defeat of the Heath government.[1] The victorious Labour Party promptly repealed the Industrial Relations Act and replaced it with the Trade Union and Labour Relations Act 1974, which scrapped the "offensive" provisions but effectively re-enacted the remainder of Carr's 1971 Act.
In 1971, Carr escaped injury when The Angry Brigade anarchist group exploded two bombs outside his house.[4] More than thirty years later, a member of the group issued a public apology to Carr and sent him a Christmas card.[5]
In 1972, Carr served a brief period as Lord President of the Council and then was appointed Home Secretary following Reginald Maudling's resignation. Following Heath's defeat in the first ballot of the 1975 Conservative leadership contest, he asked Carr to "take over the functions of leader" until a new leader was elected.[6] The day after her election the new leader, Margaret Thatcher met with Carr, according to her at his request, before she formed shadow cabinet. According to her memoirs, Carr had been close to Heath and so she would have understood "if he did not relish the prospect of serving under" her. She stated that Carr made it clear that the only post that he would accept would be that of Shadow Foreign Secretary. She told him that she could not promise that and confided in her memoirs that at that stage, she was still considering appointments and was "not convinced" that she would offer Carr any role in the shadow cabinet. She proceeded to appoint Maudling as Shadow Foreign Secretary and saw Carr again later to inform him of her decision. In her memoirs, she speculated that Carr might have been "persuaded to stay in another capacity" but did not offer him the chance and noted, "I was not keen to have another strong opponent in any position on the team".[7]