Should we change the rules of this club?

With the victory over Clause IV complete, and a little ritual growling at the unions beneath his belt, what new windmills are there for Tony Blair to lift his lance towards? How about the House of Lords? It is almost a year now since, in his campaign for the Labour leadership, Mr Blair pledged the party to early legislation to end the voting rights of hereditary peers. Nothing has been heard of it since. Is Labour backing off? Or has it simply come to realise what a minefield its leader has committed the party to?

The case for reform is all too self-evident. This is an age when the democratic myth goes unquestioned. The House of Lords, the largest and oldest second chamber in the world, is a lineal descendant of the 10th-century Saxon Witenagemot and, despite the odd change, is still largely dominated by hereditary peers who - with the exception of the aliens, bankrupts and lunatics among their number - have the right to determine law, just as each still has the individual right of access to the Sovereign.

But there is more to it than symbolism. During Tory administrations, the House of Lords may be like a sleeping giant, stirring now and again but not very often. When the Tories were in opposition, however, "they bullied the living daylights out of the Labour government", as a long- serving occupant of one of the whips' officesremarked. It may be true, as the Labour historian Ben Pimlott observes, that in the early Eighties the Lords was one of the few institutional brakes on the elective dictatorship of the Thatcher administration. But on average it inflicted about 12 defeats annually on the government, compared with 70 a year under Labour.

The fact that it has always been non-Tories who have been in the vanguard of Lords reform speaks for itself. It was the Liberal prime minister, Herbert Asquith, who had to threaten to create 600 new peers to force the Lords to pass the 1911 Parliament Act, which restricted their powers over finance bills and introduced the notion that they could only delay, and not throw out, legislation to which the Commons was committed.

It was a Labour government which, in 1949, reduced that delaying power to one year for fear the Lords would block the nationalisation of steel, a key manifesto commitment. And it was Labour again which, in 1968, tried to introduce the last reform package for the Lords. Designed to give a working majority in the upper chamber to the government of the day, it was backed, after long negotiations, by the Tory front bench. But the scheme was vetoed by an unlikely backbench alliance between the Labour radical Michael Foot and the arch-Conservative Enoch Powell, who both saw the plan as an attempt to dilute the power of the elected chamber. There is a fundamental problem at the heart of all attempts at reform. And it lies in the contradictory roles that the upper chamber has taken upon itself over time.

What does the House of Lords do? Nothing in particular, but it does it very well, in the judgement of Gilbert and Sullivan. And it is true that the place satisfies something singular in the British sense of humour. But in addition to being a supreme court and a well-appointed gentlemen's club (for, by and large, well-appointed gentlemen), it performs several disparate functions. It is a revising chamber for the detail of legislation churned out with often reckless speed by the Commons. It initiates non-controversial bills in its own right. It is a constitutional brake, watching over the abuse of power by government which is, in Lord Hailsham's phrase, increasingly an "elective dictatorship". And it is a forum of national debate, an embodiment of the nation and a residuum of some kind of English, Scottish, Irish and Welsh spirituality.

For some of these functions it requires power, for others it requires moral authority yet a sense of legislative restraint. This creates a central paradox on which Mr Powell put his finger in a brilliant speech in one of those 1968 debates. "Reform is commended to us on two contradictory grounds," he told the Commons, "to prevent the Upper House from frustrating or unduly delaying the decisions and wishes of this House ... [and] to enable the Upper House to be a more effective check upon the proceedings of this House and to hold a more convincing balance against it." Both these notions, he insisted, were chimerical.

Or, as the French revolutionary Abb Sieys put it more succinctly: if a second chamber agrees with the first, it is useless; and if it disagrees, it is dangerous. Translating this into practical politics means there is value in a weak second chamber.

There are those who hold to this view still. "The functions have to be exercised by someone," says the Lord Chancellor, Lord Mackay, a man not known for his reticence in reform in other areas. "The present methods produce a degree of variety and of expertise in the Lords which is extremely valuable. There's a lot to be said for the elected representatives of the people having the ultimate power, and a second chamber which is not elected giving a reasonably objective analysis of the legislative proposals. The fact that they are not dependent in any way on anyone for their membership, once they are there, is an important aspect of that."

That view receives support from surprising quarters. "The present system, though it is dubious and corrupt, does involve a good number of distinguished people of talent," says Mr Pimlott. "An elected House of Lords would give greater democratic legitimacy, but it would exclude a lot of the good people who are in it at present and who are just not interested in conventional party politics. There's a mania for democracy at the moment, but we don't have to elect everything; we don't elect judges or police chiefs as they do in the States, and nor should we. It's good to have some other source than the hustings."

The parliamentary historian Professor Conrad Russell, himself a hereditary peer (the fifth Earl Russell), admits the present system is hard to defend. But he points to certain advantages. It involves people who are not part of the ordinary political system and individuals of singular calibre. "The really refreshing part of our debates is when people get up from the cross-benches who have no party axe but do have personal experience of the subject under discussion," he says.

Such individuals can make penetrating contributions. The law on the Child Support Agency was passed uncritically in the Commons; by contrast, in the Lords the seeds of the dbcle to follow were discerned by peers with experience in areas directly connected with the subject - as president of the family division of the High Court, as a member of a royal commission on one-parent families and as a senior tax inspector who appreciated how arbitrary some of the powers were.

Peers such as them often spot unworkable or unnecessarily draconian measures hidden in the screeds of orders of delegated powers which have been increasingly used by the present government in an attempt to bypass parliamentary scrutiny. They also sit on highly respected Lords select committees, such as those on science or Europe, which government ministers are known to regard with considerable dread. "My Secretary of State is far more nervous going before them than he is before a Commons committee," confides one senior civil servant. "They know what they are talking about. There's no room for bluffing."

Those virtues are not sufficient to counter the sense of indignant democracy in the new Labour Party, nor to allay the fear that a Lords with an inbuilt Tory majority could render a Labour government impotent in the final year of its term. "It's old, decrepit and washed out. There's no argument for reform. A unicameral system is the only option, especially now there's a European dimension," insists an unrepentant Mr Foot. "The arguments are even stronger now than they were before."

The arguments may not have changed. Indeed, most bear a striking similarity to those outlined and weighed in the commission chaired by Lord Bryce into Lords reform in 1917. But the political context has altered.

Bryce considered various ways of reform. Nomination to the Lords by the prime minister, he concluded, would end up as a vehicle for rewarding political loyalty by party stooges. Direct election would create a rival to the Commons "because it had an equal mandate from the people" and those elected would be too similar to MPs. Election by local authorities would unacceptably reinforce the stranglehold of the party system.

For Mr Blair, the dilemma is unchanged. The more democratic he makes the Lords, the more he risks it clashing with the Commons. Indeed, if he responds to demands that the Lords be elected by proportional representation, he risks making it more democratic to many than the Commons. "What we should have constructed," warns Mr Powell, "is a situation of permanent deadlock." The result, according to the Tory historian Andrew Roberts, could be "a clash in a way that we haven't seen since the Civil War, or we might end up with a situation as in America, where Newt Gingrich is suddenly more important than President Clinton."

Conversely, if Mr Blair simply abolishes the voting rights of hereditary peers, he will turn the Lords into a giant quango of life peers appointed at the behest of the three main party leaders. That would inevitably narrow the focus of the House and increase the domination of the party system. However hard you tried, predicts Lord Russell, the only people who were nominated would be people who were already known to the PM of the day or his cronies.

Lord Bryce's proffered solution was a two-tier affair, with a quarter of peers selected by a joint standing committee of both Houses and three- quarters elected by MPs sitting in regional rather than party groups. That may sound archaic, but it might yet turn out to find a place in current Labour modernism.

Is the issue one of legitimacy or effectiveness? The problem for Mr Blair is how to find a way of making the Lords more legitimate (and therefore more likely to be in tune with a newly elected government) without losing the strengths which have evolved with the existing system and without setting up the Lords as a rival to the Commons, which would risk perpetual confrontation. It will actually be harder than he imagined to tell the baby from the bathwater.

And more than that. A party concerned with principle as well as power needs to consider how to reverse the recent trends, greatly exacerbated by the Conservatives since 1979, which have reduced the power of both Parliament and local government. If Mr Blair is tussling with all that, no wonder we have not heard from him on the subject for almost a year.

Lord Silk. His predecessors as Law Lords earlier in the century were examples of how judges start life as reactionaries and grow more conservative with age. But although appointed by Mrs Thatcher, he is liberal, thoughtful, knowledgeable, humane, broad-minded and charming

- all the things most MPs aren't, and he would make a good candidate if Britain were ever to throw the office of monarch open for election.

Lord Backwood. Enjoys a Wodehousian existence in Shropshire, keeping rare-breed sheep, reading only the court and social page of his newspaper, and driving a variety of English classic cars. Last July word came from a peer, who had been in the same house at Winchester, that the Government was in trouble. The chum put him up overnight, ushered him through the division lobbies with a lot of people he hadn't seen since university, and Baroness Thatcher's Maastricht revolt was swamped.

Lord Elder: He lost his seat in the second 1974 election, and still felt himself a young man of 58. After a lifetime in politics, he was beginning a long and tedious retirement in the West Country when the life peerage came along in Harold Wilson's resignation honours list. Since then, he's been able to carry on as if nothing had changed, keeping a few directorships for money and turning up at Westminster to see his old chums.

Lady Hardwork of Westminster. Since most hereditary peers don't go in for serious politics, both main parties have to create life peers to staff up their front benches in the Lords. Lady Hardwork used to be Tory leader of a local authority, and since 1986 has been a spokesperson on home affairs, transport and defence. It is a thankless task, because on any subject from dog licensing to tax fraud in the Third World there will be an expert somewhere turning up with a difficult question.

Lord Straddle: A distinguished economic historian in his sixties, he inherited from the third baron, a colonel in the British Army, 10 years ago. He speaks several times a month on education, finance, the disabled and the countryside (he has a holiday home in the Lake District), always interestingly and influentially, if slightly short on rhetoric and fire. Serves on the science and technology select committee.

Lord Trough unexpectedly inherited his ancient title in middle age from a distant cousin after a spectacularly unsuccessful career running a corner shop in Hertfordshire. Suddenly he discovered he had access to a sumptuous free club with congenial company, subsidised bars and comfortable armchairs in which to doze away the afternoon. He has only to look into the chamber and he is entitled to expenses of up to £134.50 a day.

The Bishop of Melbury is a sign of deep changes beneath the timeless facade, a much more rounded and knowledgeable character than his counterpart a quarter of a century ago. Used to ancient cathedrals, he finds the gothic red-leather spendour of the Lords comfortingly familiar. He is keen on human rights and housing, and makes a point of speaking in debates and writing in newspapers, often - to ministers' annoyance - criticising the effects of government policy.