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Stage set for Lords reform battle

Historic legislation to reform the House of Lords has been included in the Queen's Speech setting out the Government's agenda for the year ahead, despite warnings from MPs that it could tear the coalition apart.

The controversial measures could result in an 80% elected Upper House of Parliament, with numbers of peers "substantially" cut from their current 800, but the proposal faces stiff resistance not only from sitting peers but also large numbers of Conservative backbenchers, with some experts predicting that pitched battles between opponents and supporters of reform could swallow up weeks of parliamentary time.

But Tory Prime Minister David Cameron and his Liberal Democrat deputy Nick Clegg insisted that the Government's main focus over the coming year will remain on bringing down the state deficit and promoting economic growth.

The speech, delivered amid lavish traditional ceremony in the House of Lords, promises 19 Government Bills, including four in draft form, in a legislative programme for the coming year which the Queen told MPs would "focus on economic growth, justice and constitutional reform".

A Children and Families Bill will deliver the biggest shake-up of support for children with special needs in England for 30 years and will "put families front and centre of our national life", said Mr Cameron and Mr Clegg. The Bill will implement plans to make inter-racial adoption easier in England and to allow mothers and fathers throughout Britain to share parental leave following the birth of their child.

Banks will be required to create a "ring fence" between high street services for households and businesses and the risky "casino" activities of their investment arms. The Banking Reform Bill will implement the recommendations of last year's Vickers Report with the aim of insulating vital consumer and business services from global financial shocks, making it easier to close down banks which get into trouble and curtailing the implicit state bailout guarantee which the sector currently enjoys.

The Government risks clashes with unions with a Public Service Pensions Bill containing reforms which have already provoked massive strikes - with further walkouts expected on Thursday - as well as an Enterprise and Regulatory Reform Bill overhauling employment tribunals and cutting inspections on businesses. Slashing "unnecessary" red tape will make Britain "one of the most-business-friendly countries in the world", promised Mr Cameron and Mr Clegg. The Bill also aims to strengthen shareholders' power to reject excessive boardroom pay deals and will create a Green Investment Bank to accelerate investment in environment-friendly projects.

Legislation will raise the state pension age to 67 between 2026 and 2028, meaning later retirement for anyone aged under 52 now, and will commit the Government to further increases as lifespans lengthen. The Pensions Bill will also implement the Budget proposal for a new single-tier state pension set at around £140 a week. A draft Care and Support Bill proposes new personal budgets for adults in care, but leaves larger-scale reform - currently the subject of all-party talks - until after the upcoming Government White Paper on care.

A new National Crime Agency, due to start work in 2013 tackling serious and organised crime and strengthening border security, will be established by the Crime and Courts Bill, which also introduces an offence of drug-driving and modernises the court system and the process for appointing judges in England and Wales. A Defamation Bill will offer new protections for freedom of speech in England and Wales and a Justice and Security Bill will allow courts to hear evidence from security and intelligence agencies behind closed doors.

Controversial plans to increase surveillance of internet traffic - branded a "snooper's charter" by critics - are included in a draft Communications Data Bill, which could allow security agencies to access details of the time and origin of messages but not their content. An Energy Bill will reform the electricity market across the UK to enable large-scale investment in low-carbon generation capacity, while a draft Water Bill aims to improve competitiveness and efficiency of the industry in England and Wales.