It wouldn't give Mandelson any power, as he's not an elected member of parliament, he cannot enact or enforce any law.
He's been forced to resign once and fired for fraud. After that he was effectively banned from standing as a member of parliament. As such, he was given a job in europe. But Brown being a corrupt douche wanted him back, and so gave him the lordship and hence a seat in the House of Lords. That enabled brown to hire him as business secretary, but he still has no power, merely taking an advisery role.
He still has influence and as such is still a danger and a threat to the peoples of this nation, but legally, he has no power.
As for the bill. I wouldn't worry too much. Parliament is out for xmas and will be back late jan early feb, after which the conservatives and lib dems are going to use every opportunity to show up labour. This bill would be a nice bit of ammo, thats if it even gets read. Rumour is that the gov is going to call an early election, march, april time. The moment the election is called, parliament is dissolved and the nation goes into a state of purdah, meaning nothing happens. No laws get passed, changed, everything stays as is til the election is won.
And because this proposal is a labour one, when the cons win (and they will), they're never going to be seen stealing a labour policy, because thats exactly what labour have been doing to the cons since Blair was first elected.