The Tories greatest fear is that the government may well let stage one drag on indefinitely, ensuring there is no real reform but already having abolished the Lords' inbuilt Tory majority. There's nothing new in attempts to reform the Lords. The last was only 30 years ago but was finally talked out on the floor of the Commons. It is a notoriously difficult area for reform, with powerful arguments on all sides. Those in favour of the status quo claim Peers have persistently proved their willingness to buck all governments, including Tory ones.
Opponents insist the upper house is an undemocratic anachronism - but are split on how to reform it.
An entirely elected second chamber could rival the Commons whereas appointed peers would be seen as cronies of whichever side appointed them. Some sort of mixture seems the most likely outcome - and even some hereditaries seem certain to survive after being transformed into life peers.