In election pitch, UK’s Opposition Labour Party pledges to cut hidden remittance fees

Britain’s Opposition Labour Party has pledged to clamp down on costly hidden fees associated with international remittances from the UK to countries such as India as it makes its pitch to voters in the lead up to a general election, expected next year.

Shadow foreign secretary David Lammy hosted a special ‘Connecting Communities’ reception here Monday evening where he hailed the contributions made by Indian businesses to the UK economy as a ‘huge success story’.

Joined by shadow women and equalities secretary Anneliese Dodds, the senior shadow minister of Guyanese heritage highlighted the contribution of Britain’s diverse diaspora communities, through business, culture, art, food and music, social action and community engagement.

“Unlike the Tories who seek to pit communities against each other in divisive culture wars, the next Labour government will value the enormous contribution of Britain’s diverse communities both at home and abroad,’ said Lammy.

“The positive impact of diaspora communities to fighting poverty and inequality through remittance payments is too often overlooked. Costly hidden fees on these payments put financial pressure on families in Britain already struggling to make ends meet in the Conservative cost of living crisis. In government, Labour will set the goal of reducing the obstacles and costs to cross border payments, keeping money in the pockets of Britain’s communities and allowing them to build on their contribution to Britain’s impact in the world,” he said.

Remittance payments are defined as international transfers sent from households in the UK, typically to support friends and families overseas. The World Bank has estimated the value of these payments from the UK at USD 10.7 billion in 2022. According to the Labour Party, hidden fees estimated to cost nearly half a billion pounds a year are putting additional pressure on families in the UK already struggling with the cost-of-living crisis.

“We’re now at a stage where there are over a thousand Indian businesses contributing over a billion to the UK economy. That is a huge success story’ if I get the opportunity to serve as foreign secretary, I want to address the issues around remittances besides trade and enterprise,’ added Lammy.

Reducing transfer costs on remittances to 3 per cent globally was one of the UN Sustainable Development Goals (SDGs) member states signed up to in 2015. International payments involving foreign exchange rates are expensive, with many involving hidden fees averaging at 5-6 per cent in the UK.

The shadow minister pointed out that the amount of remittances flowing out from the UK’s diaspora communities dwarfs the country’s aid budget, which a Labour-led government wants to return to the 0.7 per cent of national income target.

“We want to get back to a position that this country should have, particularly with communities from the Global South,’ he added.