By Chris Mason
Political editor
This is a row that gets to the heart of one of the biggest issues in contemporary domestic politics.
Building more homes in England and building them in places people want to live.
When I speak to folk at Westminster – of plenty of political affiliations – most accept more homes are needed.
But how many, and where they are built is contentious, with some people less than keen on new houses near where they live.
And then there are the environmental considerations.
The government reckoned it had latched onto a plan to help make it easier to build more homes.
It involved getting rid of a law they could not get rid of when the UK was in the European Union, which blocked development when there was a risk of water pollution.
To use the technical language, this relates to “nutrient neutrality requirements”.
The government claimed these requirements would stop 100,000 new homes being built before 2030.
Ministers said they had alternative ideas to answer the environmental questions raised by new houses.
But green groups reckoned the plans were terrible and opposition parties opposed them.
Labour are working up their own plans to square the circle of environmental concerns and the demand for new housing, including an idea to let developers get on with building but making sure they have sorted the environmental issues before anyone can move in to the new place.
Governments often lose votes in the House of Lords, but what makes this one stand out is ministers can’t revive this plan easily.
Because it is a new idea, parliamentary procedure means the only way they could have another go would be to attach it to another proposed law, or bill, after what is known as the King’s Speech in November – when the government will set out its planned new laws for the year ahead.
When you are in government, losing votes are hard to spin as good news.
But what is striking about this is the Conservatives are seeking to weaponise defeat.
They are arguing it proves Labour want to block housebuilding.
Expect to hear the prime minister and others use this loss to make this point in the coming months.
Some on the Labour side even whispered privately that they felt the Conservatives wanted to lose, so they could make this argument.
Government sources insist it is trickier to get members of the House of Lords to show up and they did their best.
Labour acknowledge the nutrient neutrality requirements need to change, but say that the government’s plans were flawed and their own ideas would be just as likely to deliver plenty more homes.
For Westminster’s two big parties, this is just the beginning of a battle to be seen as the builders.
We will hear plenty more of it between now and the election.