The government is officially scrapping the Bibby Stockholm barge after it was repurposed to house asylum seekers.

The barge, moored in Dorset right now, was meant to cut hotel bills by accommodating up to 500 adult men who came to the UK via small boat crossings as they waited for their cases to be heard.

The Home Office confirmed today the contract – first announced by the Conservatives in March 2023 – will end from January 2025.

The new Labour government said it would cost more than £20m to renew the deal.

Scrapping the barge is part of the “government’s commitment to clear the backlog and fix the asylum system”, the Home Office said today.

The government has also claimed it is going to save £7.7bn of savings in asylum costs over the next decade by bringing in its own ideas to address the migrant crisis.

There are 400 people currently onboard the barge, which is one of three major asylum accommodation sites set up by the Tory government.

Dame Angela Eagle, minister for border security and asylum, said: “We are determined to restore order to the asylum system, so that it operates swiftly, firmly and fairly; and ensures the rules are 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.

“The Bibby Stockholm will continue to be in use until the contract expires in January 2025.”

The barge has been controversial, with campaigners, MPs and local communities pushing back on using it and protests even popping up in Portland.

The first group of asylum seekers boarded it in August 2023. Within four days, there was an outbreak of Legionella bacteria in its water system, meaning migrants had to be moved off the boat.

The migrants returned in October.

In December, an asylum seeker died on board, thought to have taken his own life.

Labour has also overhauled the Tories’ Rwanda deportation scheme and instead wants to set up a new Border Security Command to stop people-smuggling gangs.

The government is looking at deepening ties with European allies, too, and funding health and education projects abroad to prevent migrants leaving their home countries in the first place.

Dorset Council leader Nick Ireland said they had always opposed the barge being at Portland Port, and said the news was “welcome”.

The Green Party was also happy with news, saying: “The conditions there are as cruel as they are ineffective. it’s entirely inappropriate for people to be held in such vile conditions.

“Seeking asylum is a right that the UK should ensure is undertaken with dignity and appropriate levels of support.”

It also called for the government to close other detention centres like Yarl’s Wood.