Varley was appointed Secretary of State for Energy in March 1974 when Labour returned to power. The appointment of an NUM-sponsored MP helped the government end the NUM strike which had led the previous government to ration electricity to three days a week. Varley subsidised the National Coal Board and chose a British design for new nuclear power stations over an American rival. He also began the procedure to nationalise North Sea oil. During the Common Market referendum he advocated a 'No' vote but was not prominent in the campaign. Immediately afterwards Wilson swapped Varley's and Benn's posts, so that Varley was effectively promoted to Secretary of State for Industry. In November 1976 Varley suffered an embarrassing public defeat when he determined to shut down the loss-making Chrysler car factory: the Cabinet forced him to increase its subsidy to keep it open. He continued the government's slow nationalisation programme by appointing Michael Edwardes to take over at British Leyland.