The issue was the status of the Local Government Bill - Lord Howarth had argued that the bill was a "hybrid" bill - part public bill, part local bill. His arguments can be found in his speech - which those who like the detail of procedural rules will find interesting - here.
He convinced sufficient Peers that when the division was taken, the Government lost by 154-150.
This was not a point about the merit of the bill - that will be discussed when the nature of the bill has been considered by the Examiners of Petitions for Private Bills. Until that has been done the Second Reading of the bill is postponed. More information on hybrid bills can be found here.