THE cost of a passport could come down after a surge in demand looked set to leave the Passport Office with a £50 million 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" for dealing with an application was around £57.

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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 £50 million surplus last year, and Mr Pugh said: "If it were to continue at this level I would expect a surplus of a similar order by the end of this financial year." Emergency measures were announced last month to help clear a backlog in passport applications before the main summer holiday season.

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".

But the committee's Labour chairman Keith Vaz said 483,000 applications were classed as "work in progress" on June 1, a figure which had now increased.

Mr Pugh acknowledged the figure had gone up and was "just over 508,000" last week, but it was now falling.

He defended the office's work, telling the MPs: "The organisation is not in chaos, we are continuing to issue to our customers over 170,000 cases per week."

Mr Pugh insisted there had been "no let-up" in the scrutiny of applications.