Moderate Tory in Heath's cabinet known for his controversial trade union reforms

Robert Carr, who has died aged 95, was the archetypal Tory gentleman, a moderate among Edward Heath's cabinet ministers. His most crucial, and most controversial, role came as employment secretary after the Conservative election victory in 1970, charged with the task of trade union reform ? the first serious postwar attempt to recast the relationship between the unions and the state.

Carr was already well tutored in the mysteries of industrial relations, partly because of his background in the family engineering firm, but also as a junior minister (1955-58) to Iain Macleod at the old Ministry of Labour. Even so, he was deeply uneasy about the ambitious scope of the Industrial Relations Act of 1971, which was largely the work of Geoffrey Howe, Heath's solicitor general.

Carr had always wanted a short, simple and easily understood act which would be acceptable to rank-and-file trade unionists. In the event it was ridiculously complex and, in parts, positively opaque with its 170 sections, 20 separate schedules, and an apparatus that included a national industrial relations court. Carr later confessed that he could not understand it.

The initiative gave the anarchist Angry Brigade the pretext for setting off a bomb that wrecked the kitchen of Carr's home, and triggered the most organised nationwide protest by the labour movement, led by the TUC, since the second world war. In June 1972 the legislation was finally scuppered when a group of dockers in the Transport and General Workers' Union defied the law and landed in jail. They were hurriedly released on the instructions of a hitherto unknown Official Solicitor ? an undercover action by the government to avert a possible national strike throughout industry.

Carr had moved on to become lord president of the council and leader of the Commons in April 1972. The following November, Reginald Maudling resigned as home secretary after being named in connection with the John Poulson fraud case, and Carr succeeded him.

This was the role that allowed him to use his liberal instincts to greater effect than any job he held in government. Yet even though it lasted only until the general election defeat of February 1974, his record suggests that a longer spell might have established Carr as the most enlightened and reforming of recent Conservative home secretaries.

He had not been dealt an easy hand: it was still unclear whether Maudling might return to government and, if so, in what capacity; in the event, he did not. Moreover, Carr went to the Home Office under a strong Tory law-and-order mandate from the 1970 election campaign, crime figures were rising and he had to contend with the legacy of serious prison riots in mid-1972. By the summer of 1973, he introduced the longest list of reforms in prison rules for a decade. He removed the traditional prison punishment of bread-and-water diet; he approved more frequent prison visits by relatives; he abolished censorship of prisoners' letters; and, to a large extent, he restored remission lost through alleged misconduct.

The other major issue he had to handle was immigration policy at a time when Enoch Powell was at the height of his popularity not only with the Conservative rightwing but, more significantly, with a large section of Labour voters. The 1971 Immigration Act had toughened up the provisions affecting new as well as existing immigrants. At the 1972 Conservative party conference, against the background of Idi Amin's expulsion of Asians from Uganda, Carr had to confront Powell over his demand for extreme measures. He did this with skill and courage, leaving Powell unusually deflated.

Once back in opposition in 1974, Carr remained on the Tory frontbench as shadow chancellor to face Denis Healey. The following year Margaret Thatcher became leader of the Conservatives: Heath had lost in the first round of elections for the post, and Carr acted as leader for a week, the industrial relations debacle having ruled him out as a candidate himself. He was no Thatcherite ? and she knew it. So in 1975 he accepted a life peerage.

In the Lords he settled down to an unspectacular political life and concentrated on his outside business interests. He was a director of Cadbury-Schweppes (1979-87); Securicor (1974-85); Prudential Assurance (1976-85, and chairman 1980-85); chairman of Business in the Community (1984-97); and, to his great delight, president of Surrey Cricket Club (1985-86).

Carr was brought up in north London and went to Westminster school. In 1938 he graduated from Gonville and Caius College, Cambridge, with a metallurgy degree and joined the family metal engineering firm of John Dale & Co.

A collapsed lung kept him from war service ? but also gave him a unique insight into industrial relations. The John Dale factory at the time was specialising in airframes for Lancaster bombers. Years later Carr told me: "I learned the hard way how industrial relations operate on the shop floor ? and just how important trade unions are."

Elected to parliament first in 1950 for Mitcham (and in 1974 for Sutton Carshalton), Carr soon became enmeshed in ministerial duties; first as PPS (1951-55) to Anthony Eden when he was foreign secretary, and then prime minister. At the Ministry of Labour, Carr focused on training systems for young workers, and after a period back in the family business returned to government in the junior overseas development post labelled secretary for technical co-operation (1963-64). After Harold Wilson's Labour government came to power in 1964, Carr was a member of the Tory front- bench in various roles ? as spokesman on overseas development, aviation and employment.

Carr was a man with strong ideals, a profound distaste for injustice and inequalities, and unusual decency for a top-flight politician. He is survived by his wife, Joan, whom he married in 1943, and their two daughters. Their son died in a road accident in 1965.

? Leonard Robert Carr, Lord Carr of Hadley, politician and businessman, born 11 November 1916; died 17 February 2012