I don't think, lily, that the "nibbling round the edges" that you mention (could you be more specific, please? I'm not entirely sure I know what you mean) is the cause of the generous expenses that you also mention. There is clearly a fault somewhere in the organisation of paying expenses to people in our parliament (both houses), but the idea that this is the fault of secularism is new to me. I had always thought it was the fault of bad rules about paying expenses, rules with too many loopholes that MPs and Lords can use to get hold of more taxpayers' money.
In short, I don't see the connection between secularism and government individuals' expenses.
I do see a connection between however many unelected bishops there are in the House of Lords and proper democracy.
If secularism isn't the answer to greater fairness in democracy, to the establishment of laws which do not affect any person, whatever their faith or lack thereof, differently from any other person, what is?