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The cost of a passport could come down after a surge in demand looked set to leave the Passport Office with a £50m surplus.

The head of the beleaguered organisation insisted that it was “not in chaos” as he told MPs there were still 508,000 applications being dealt with.

HM Passport Office chief executive Paul Pugh told MPs the exceptional demand meant the organisation was likely to record a surplus, which could be passed on to customers through a reduction in fees.

A standard adult first passport or renewal costs £72.50, but Mr Pugh told the Home Affairs Select Committee the “unit cost” was around £57.

Asked if the Passport Office would be making a “surplus or a loss” this year, Mr Pugh said: “That will depend upon levels of demand and levels of cost.

“If demand remains very high this year, that will of course increase our income. One of the options that then may be open to us is reduction of fees to the customer.”

The office made a £50m surplus last year and was on course to make a similar surplus this year.

Emergency measures were announced last month to help clear a backlog in passport applications before the holidays.

Mr Pugh said the office was issuing more than 170,000 applications each week, a figure which was set to rise to around 180,000, and the “vast majority” of customers were receiving their documents within a “reasonable period”.

Mr Pugh told the MPs: “The organisation is not in chaos, we are continuing to issue to our customers over 170,000 cases per week.”

Insisting that the majority of cases were dealt with promptly, he said: “To the end of June, for straightforward renewals, 94 per cent were within three weeks and 98 per cent within four weeks.”

Mr Pugh said there had been a massive increase in applications, with a record 775,000 in June.