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The contract for the Bibby Stockholm barge, which houses asylum seekers off the coast of Dorset, will not be renewed past January, the Home Office has announced.
Extending the use of the barge, which is moored off Portland, would have cost more than £20 million next year.
The three-storey vessel has capacity for up to 500 men, aged 18-65.
Now run under a Labour government, the Home Office said the move was part of a commitment to “clear the backlog and fix the asylum system”.
Dame Angela Eagle, the minister for border security and asylum, said she wanted the asylum system to operate "swiftly, firmly and fairly" and ensure the rules were properly enforced.
“The Home Secretary has set out plans to start clearing the asylum backlog and making savings on accommodation which is running up vast bills for the taxpayer," she said.
Ending the use of the Bibby Stockholm forms part of the expected £7.7 billion of savings in asylum costs over the next decade.
The barge will continue to house migrants until the contract expires in January 2025.
It is almost a year since the first residents were moved on to the Bibby Stockholm.