The move to fund compensation through an increase in the passport application fee was revealed following a decision by the Government to pay ex-gratia sums to inconvenienced holidaymakers.
The decision to pass on costs was quickly condemned by opposition politicians and consumer groups. The Conservative home affairs spokesman, David Lidington, said it was "outrageous" and called thenew computerised application system, which is largely blamed for the backlog, "a fiasco".
Last week the Home Office disclosed that the backlog in applications waiting to be processed had risen to 530,000, despite the appointment of 300 extra staff to help clear it.
Problems with the new computer system have been exacerbated by the need for children to have their own passports together with the upsurge of seasonal demand.
But the head of the Passport Agency, Kevin Sheehan, defended the agency yesterday and said that it had processed 2.4 million passports so far this year with just 50 holiday dates missed. But he confirmed that the compensation bill would have to be clawed back through the fee charged for issuing a new passport - currently pounds 21 for a standard 10-year passport.
Mr Sheehan said: "The financial regime under which we operate means our total budget has to be met through the passport fee. That means any money we pay out in compensation has to be recovered, along with our other costs, through the fee. We don't know yet whether that will mean an increase because this year's fee review has yet to be finalised."
While last year's compensation bill of pounds 75,000 was equivalent to less than 2p per passport application fee, this year's bill appeared likely to be more significant given the state of the backlog.Reuse content