> They are likely even more out of touch with the electorate.

Not compared to the hereditary peers.

In theory these people have proved themselves useful in some way and bring expertise to the upper chamber, rather than just being born in the right family. In practice there is some of that and some political cronyism.

> Seems to me this just centralizes power even more in the hands of a few.

That is exactly what hereditary peerage is. The few, by definition. The aristocracy.