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I lived in Britain for a decade and the impression I got was that, outside people with genuine proven merit like artists and scientists, having a titles of nobility there was a pretty good indicator of the holder of the title being a complete total sociopath, the higher the title the worse the character of the holder.
They do quite a lot of whitewashing of the system by giving things like knighhoods and damehoods to well known and loved actors and actresses, plus a renowned scientist here and there, plus some lesser honors (NEVER a knighthood or damehood) to people like firemen or nurses who went above and beyond their duty in helping others, but the vast majoriyty of types with Peerages and above are either well connected career politicians who made sure the "right" people gained from the system, very wealthy nouveau riche or those from old wealth.
https://youtu.be/Fx446n4WF5c?t=107
Tbh I don't think anyone ever thought Mandleson was good, his nickname was The Prince of Darkness.
Hes a classic case of "its always the people you suspect the most"
I think that if one would blindly throw a stone in the middle of the Lords it would be far more likely to hit a person who is not good (i.e. with a personal moral better than "personal upside maximization") than one who is.
More broadly for things like Peerages, outside artists it's rich people, politicians and public-school attending scions of the upper and upper-middle class (even the Public Servants who get one are public-school educated). Notice how common people who are not in the public eye and committed enormous acts of bravery and self-sacrifice for the good of others (the above-mentioned "firemen and nurses") never get peerages or above, and instead get at most OBEs.
I think we should, to a degree, separate peerages from KBE/CBE/MBE/OBE/BM - they're not political and there are (so far as I know) specific criteria that need to be met to achieve the various levels (for instance someone doing something locally will by definition never get anything higher than an OBE, because a CBE requires significant achievement at a regional or national level).
Peerages are a bit weird, senior politicians/lawyers/academics etc getting appointments makes sense because they're the upper legislative house and to a degree we want some level of political nous in the parliamentary body. However they're also given to the likes of Andrew Lloyd Webber presumably as a reward for his achievements, which may or may not be deserved, but also mean he can be shipped in if required to vote on legislation.
Separation of "honours like" and "legislative like" peerages would be a good idea.
The criteria of "significant achievement" is basically bollocks: for example Fred Goodwin who led RBS to pretty much bankruptcy (not quite as it was saved by the state) held a knighthood for "Services to Finance" which he got for merelly leading the bank he almost destroyed (though at least it was annuled after he almost destroyed it) and mandarins, politicians and public prosecutors get theirs for nothing more than doing their job without being brazenly incompetent, something which is only a "significant achivement" if one expects extreme incompetence for the vast majority of such people hence doing one's job without ending up in the press for massive incompetent is a "significant achievement".
From my point of view (as an immigrant who lived in Britain for a decade, and thus having not started with any respect or lack thereof for the Honors System), after a couple of years I concluded that whilst the folklore surrounding it was all about if being about honor (hence the supposed criteria of "significant achievement" and the very loud giving once in a while of one to a very visible public personalities such as an actor for being a famous who did their job in a competent manner), the reality of it was no such thing and de facto the criteria were highly skewed by the social class a recipient originated from and their level of contribution to "keep the boat steady and stop it from being rocked".
Certainly when it comes to peerages the Honors System bares no relation to honor or any kind of achievement that goes beyond "having a specific job and not end up in the press for being exceptionally incompetent at it".
I'm not really trying to argue the point on the level of achievement - that will always be subjective. More to address the point on why local heroes don't get above OBE and to raise the absurdity of the dual use of peerages.