The House of Lords is to spend £100million on new offices opposite Parliament, with a wine cellar and art store, The Times can reveal.

The cost of the proposed redevelopment could more than double if approval is given for an underground tunnel connecting the new offices to the Palace of Westminster.

The biggest overhaul of the Lords estate in a generation comes after years of complaining by peers about cramped conditions. But there is growing disquiet about the cost of the project. With only 117 of the 733 peers able to move into the building, the cost would approach £1million per peer, even before the tunnel was taken into account.

Peers are now publicly questioning the wisdom of the decision to buy 1 and 2 Millbank, a nine-storey property yards from the peers' entrance to Parliament, at a cost of £65million. The refurbishment is expected to cost £32.9million. Lord Oakeshott of Seagrove Bay, the Liberal Democrat Treasury spokesman, questioned whether this was value for money.

From the Archive: Leading article, 1867: Who built the Houses of Parliament?

There are no Chambers for Representatives in any part of the world so incommodious, and so throughly unsuitable for the purposes of debate, as the House of Lords and the House of Commons

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Particular controversy surrounds plans for the tunnel. Engineers said that it would cost £120million - double the entire budget - and could result in the flooding of the basement of the Houses of Parliament. The Lords Works Committee has asked for a cheaper estimate, although a Lords spokesman said that the tunnel was unlikely to go ahead.

The most serious problem so far for the project came after the Administration and Works Committee, which is overseeing the work, suggested that it would be possible to develop the entire “Millbank Island site”, made up of 1 and 2 Millbank and 5 College Street, which is at the back.

It has emerged, however, that RadcliffeLeBrasseur, a firm of solicitors renting a third of the site that looks on to College Street, is now not expected to leave before its lease ends in 2015. Further redevelopment will be necessary after the firm vacates the site.

Lord Brabazon of Tara, the chairman of the Administration and Works Committee, said in a written parliamentary answer: “When the site was purchased, it was hoped that early surrender of the lease held by a third party in respect of one third of the site would make it possible to obtain vacant possession of the entire site in order for it to be refurbished as a whole.

“This has not proved possible and the refurbishment strategy has had to be reviewed to enable the site to be refurbished in two stages.”

According to documents seen by The Times, the entire project has had to be delayed 11 months, which the works committee estimates will cost £1.1million because of inflation on works of 5.5 per cent. Work is now scheduled for completion in 2011.

The scale of the development has also caused concern: the building will have a cafeteria - complete with wine cellar - in addition to the other seven cafeterias on the parliamentary estate. The spokesman said that the wine cellar would also be used for food.

Peers have also questioned the “value for money aspect” of the coffee facilities and the cost of fittings for meeting rooms, entrance halls, staircases and the library.

Lord Oakeshott has been the first to criticise the plans publicly. “The whole House should take a long, hard look at whether this really is value for public money. With millions of families struggling to pay their mortgages, should we really spend £130,000 on new chandeliers, not even in the Palace of Westminster but in offices over the road?”

Peers said last December that they feared the allocation of office space to library staff was excessive and “expressed concern that the number of computer terminals planned for the e-library may be overgenerous”.

Many of the fittings will be expensive to maintain. The works department estimated the cost of repolishing oak joinery at £70,000; chandeliers, which have not been finally agreed, are estimated at £129,000; and the cost of new “lanterns” has been given as £73,300. The committee is expected to modify the plans in response.

Peers have made clear that they are trying to keep the budget low. Energy-efficient measures have been proposed, such as a solar water-heating system.

One peer involved in the works committee defended the project yesterday. Baroness D'Souza, the convenor of the crossbench peers, said: “The building itself is going to be a project that will last for the next 100 years. If the eye-popping costs are divided by the number of years the building will be used for, it is far less eye-popping.”

She said that there were many additional costs associated with renovating an historic building, but she conceded that the cafeteria might not be needed.

A spokesman for the House of Lords did not accept that the project would cost up to £1million per peer. “The renovation provides a long-term accommodation solution for members, their staff in the House of Lords, and will provide improved library research and IT support for members, so any simple calculation of costs per peer is misleading.”

SCRAPING BY ON TUPPENCE — £48,000 A YEAR

Members of the House of Lords are not paid but can claim up to £48,000 a year tax-free. They are allowed to spend as many or as few days as they want in the chamber, which sits on average 150 days a year, but they need to sign an attendance register if they wish to claim the daily allowance, worth up to £308 last year. It is the job of the House of Lords to scrutinise legislation and hold the Government to account (there is a realistic chance that peers may throw out the 42-day detention proposal).

Peers do not have to submit receipts and an analysis of their expenses shows that nearly two thirds claim the maximum almost every time they visit. Lord Paul, a friend of Gordon Brown, whose family is said to be worth about £1.5 billion, claimed allowances for 137 days between April 2006 and March 2007. He voted 26 times on 21 different days over the same period, according to the Public Whip website. He said: “Most votes are before 5pm. I usually go after that. After work.”

Baroness D’Souza, the convenor of cross-bench peers, defended her colleagues. “A lot of them do work hard — not all of them for sure — but a lot of them do work, and a lot of reading and committee work. I certainly do a 12 to 14-hour day, every day. In contrast with legislators in Europe or certainly in America, there is this wonderful ethic, which is that you all ought to manage on tuppence.”

Lord Onslow, a hereditary peer who was elected to remain in the House, said: “When my father was here in 1945 he had no office and no telephone and no secretary, so people paid more attention to the chamber.”

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