UK fourth-largest sender of remittances

The UK is the fourth-largest sender of remittances in the world, with remittances totalling over five billion pounds sterling, according to estimats from the World Bank.

These figures, the bank itself concedes, are probably overly conservative and the true figures are many times higher.

The problem is that since the end of foreign currency controls in 1979, there has been no official mechanism for recording the flow of money in or out of the UK. In the most recent figures from the World Bank (based on estimates for 2011), the official outflow from the UK was US$3.2bn. However, the World Bank estimates the true size at $23.16bn.

Migrants in the UK sent nearly £2.5bn to India in 2011, compared with just £280 million sent by the state in the form of aid. The bank puts the flow to Nigeria at more than $3.8bn and to Poland at more than $1.2bn, despite anecdotal suggestions that many Polish plumbers and builders have gone home.

But money flows have varied since the start of the global financial crisis in 2008, affecting flows to sub-Saharan Africa, eastern Europe and central Asia. Money sent out of the UK fell by 27 per cent in 2009, which may be partly explained by migrant workers returning to their home countries when things looked particularly severe in the West. Countries with stricter border controls, such as the United States, experienced a much less steep decline in remittances, which suggests border controls act to keep migrants in as well as out and keep remittances flowing.

Since 2009, the upward trend in the value of remittances has recovered, echoing the global pattern, prompting many governments to consider regulating money flow more strictly.

The UK's shadow minister for international development, Rushanara Ali, who was born in Bangladesh, believes the UK government should try to harness migrant money to complement aid spending. "There will always be pressure on budgets. The time is ripe for coming up with new ideas on how diaspora communities can make a difference," she told The Guardian newspaper.

Ghana is one of a growing number of developing countries to set up initiatives or even entire government ministries to facilitate and increase remittances and investment from their diasporas. According to the World Bank it received $119m in remittances, $23m of which came from the UK.

The Rwandan government, which has much of its aid cut last year over claims it was helping rebels in the neighbouring Democratic Republic of Congo, has asked all Rwandans living abroad to contribute to a new "solidarity fund" to make up the difference.

However, charities such as Action Aid warn against relying on remittances to replace aid. "Remittances … are not an easily deployed form of development finance, staying in private hands for the most part and remaining patchy and uneven in their distribution," it says.