I'm not sure people are aware of the real cost of making a passport. The cost of a child's passport exceeds £46 and is subsidised by adult passport costs. The paper and technology placed inside the paper costs money.
As for courier costs, the UK government makes no profit from it, those are the costs for such a courier service.
As for sending back any required documents such as parents' birth certificates of translations of overseas birth certificates, no they cannot be sent back with the new passport for security reasons! It's not ridiculous, it is common sense.
The alternative to the courier system is to return to UK passports being issued via embassies around the world. That involves courier costs for mass transit of empty passports and it was decided that it was becoming too risky to continue with transporting such empty passports all over the world and that it is better to courier single made up passports rather than large batches of empty passports. More countries are moving over to centralized systems of overseas passport issues because now passports are more valuable and it means securing them when being in transit.
The 2 least secure ID cards in the EU are issued in countries with issuing posts into the 1000s. Their passports fair little better. The most secure ones in terms of misuse are from countries with smaller numbers of issuing posts.
There really is no-one making a profit from passport issue, other than the courier companies.
An adult UK passport is less than 8 pounds a year. A child UK passport is less than 5 pounds a year.
Any EU passport which costs less than 50 euro is being issued at a loss.