They've had a huge backlog that was reported by the media June last year. Even Fred (the moderator here) has had troubles himself trying to get a hold of them. He posted a thread here too last year.

http://www.telegraph.co.uk/news/poli...l-meeting.html

We have a friend who applied for his baby's passport in Liverpool last month (well they live in North Wales) and the passport arrived at their doorstep 2 days later (on a Saturday even). I think they've been slowly getting back on track.