Fist of all, we should ask ourselves "is the Lords Broken at the moment?". I think the answer is as it's always been: "You wouldn't design it like this, but it appears to work, God knows how". There are issues where the public's perception of politics is at variance to the reality and the fact that the lords are appointed is one of them. Why is it a problem? There are real problems in politics: the government’s velvet-facist agenda, the introduction of thought-crime onto the British Statute books, the Police's power of arrest (on a whim, for anything), the increasing intrusion of the state into our lives. All of these problems have been acquiesced to by a supine public who are certainly not agitating for state funding of Parties or more elections (quite the opposite - the public can't be bothered to turn out even for general Elections). They're not particularly bothered about how the lords are appointed, just that they do their job.
So we should ask ourselves what the lords need to achieve: Scrutiny, oversight and independent assessment of new laws. The chamber appears to do this rather well, as their consistent rejection of New Labour's Orwellian project demonstrates.
Next we should ask ourselves why it can provide such good oversight and scrutiny: Well the lords are eminent people. They are of independent mind, no matter how they got their seat. And as they do not have to face elections, they are beholden to no party. They may however voluntarily take a party whip, but there's no sanction for leaving a party once ennobled. Because they have no democratic accountability, they are subordinate to the Lower house (hmmm, is that an oxymoron?), and the parliament acts (which this Government abuses with abandon) which serve to give this subordination the force of law. This is right.
If there were to be two elected chambers, each with its own democratic legitimacy, there is the risk of "cohabitation" to use the French phrase, with the attendant risks of gridlock in the legislature: their Lordships would not submit meekly to the Parliament act if they were elected. On the other hand, if the lords (or senators as they will inevitably be called in a fatuous un-British way) were an elected oversight committee, why would be public bother to turn out for elections of people who appear to have little obvious influence over the executive? They aren't particularly interested in turning out for the elections we've already got. Such elections would become meaningless mid-term opinion polls, make the business of Government more difficult, and strain the constitution - probably to breaking point.
So I conclude that Peers should sit for life and not be elected. So this begs the Question: Who then chooses the Lords?
That Blair chap's idea that some independent committee should do the choosing is flawed. Who chooses and oversees the committee. A partisan commons? - we're back to square one.
How about a large group of eminent, intelligent, independent and politically astute people: Their Noble Lordships themselves. This would be independent of Prime-Ministerial Lobbying, and on a "Dead Man's Shoes" basis, would be transparent, as independent of Psephology as the current system and democratic - because it would remain genuinely and obviously subordinate to the elected chamber. It will increase the independence of the Lords, remove the ability of the PM to stuff the chamber with party hacks and I guarantee the quality of people wearing Ermine will improve, and so would oversight.
Make the Lords self-selecting.