I've long thought that the House of Lords should be abolished, and replaced (if at all) by a directly-elected body of fixed size. However, I must admit that the appointment of James Timpson as prisons minister, via a peerage, suggests at least one argument in favour of the present system: it allows the PM to appoint people with relevant experience from outside politics to ministerial posts. Maybe we could have a directly-elected second chamber of fixed size, plus a small number (say three max) of places for appointed ministers.
You are correct that the current second chamber structure allows governments to bring in specific expertise to ministerial posts, and any revised chamber should probably allow something similar I guess.
However I'm not sure it is necessary to have people in ministerial posts - it is perfectly possible to appoint a range of expert advisors without having to make them ministers, nor to elevate them to the second chamber.
There is also a risk - that someone with a particular expertise, and potentially a commitment to a particular policy position, may not actually understand the role of a minister, nor the levers that need to be pulled within government, parliament and the civil service to get things done. There have been previous examples where similar appointments haven't worked because the individual in question rather expected their 'pet' policy simply to be implemented, but sometimes things are more tricky than that!!
So actually I'm more positive towards Vallance's appointment than Timpson. This is for a number of reasons.
First Vallance was Chief Scientific Officer so he will understand how Whitehall and Westminster work.
Secondly science is an area where government's tend to operate at arms length, via funding priorities, regulation etc rather than directly. This, I think is a better fit for an 'outsider'.
Finally, I have a bit of a concern that Timpson's policy interests are a bit narrow - his focus has been largely on providing employment for ex-offenders. Not I'm not dismissing that this is really important - it is. But the role of a prison's minister is surely much broader than this and I'd want to be confident that he is interested in the entirety of his brief, not his (albeit very important) 'pet' policy.