The process by which Lords are created is central to the political system, however the understanding of how this happens is not clear. The key to understanding the creation of Lords is that there are two types of appointments. The first are the political appointments. The second are the cross benchers who are not political.

The creation of political Lords is entirely the gift of the Prime Minister. The PM could choose to give peerages only to their own party. They do not usually do this. Instead they have typically offered peerages only to the leaders of other parties. This was not the case with Margaret Thatcher, however since then lordships have been offered to party leaders. The number of peerages given to party leaders is not fixed and is in the gift of the PM.

There is a dissolution honours list. This is used to provide peerages to MPs who have lost their seats or who have stood down. This happens shortly after the General Election.
Once the leaders are given the right to select Lords that is entirely under their control. They choose to give the peerages according to pressures on them.

There are two main patterns that are observed but there is no direct link. The first of these is that large numbers of former MPs go to the Lords. The second is that large party donors are sometimes placed in the lords. These donors are generally notable individuals in their own right so the link is disputed. The cross benchers are selected by the Lords Appointment Committee which was created in 2000

The process for selecting Lords by the party is not clear. There is a Lords list which is elected by conference but this is only advisory. None the less Brian Paddick, who topped the Lords list, did get made a Lord. As far as other Lords are concerned the best information in the public domain is that there is no interview process and the decision is made by the Lib Dem leader in a process that is closely controlled. Candidates are consulted but there are no meetings.

The Lib Dems have many Lords, over 100 at present, and it might be thought that there would be few Lib Dem peers in this parliament. This is not necessarily the case. It would be more important to the PM what pressures are coming to bear on him rather than any specific issues of democracy. The small number of MPs would however limit the ability of the party to put pressure on the PM. It is noticable that UKIP have not been offered lordships despite their huge popular vote. This may indicate that the pressures that fall on the PM are primarily within the Palace of Westminster and not in the wider political system.