The only restriction on the type of bill which can be introduced in the senate is that they are not allowed to introduce a "money bill". Any other bill can be introduced in either house. See articles 20 and 21 of the constitution.
The UK cabinet currently has two ministers, Baroness Amos and Lord Falconer of Thoroton who are members of the house of Lords.
Diplomacy is the art of saying "nice doggy" until you can find a rock.