Your mechanic is correct that the rear hub needs replacing because the ABS sensor is built directly into the hub. No need to pay £400 for a new hub though, You can get high quality ones from SKF, Meyle etc for £70-£100 online. SKF have a large history with Volvo, so I'd go for that brand.
Below is from Volvo's parts catalog for V40. Here are the part numbers highlighted in red for the rear hub. The correct part number is dependent your vehicle
chassis number range. You can simply go to ebay and search for "SKF" + the part number, and you'll likely find the correct part, but they also have the compatibility checker on the listing...
Chassis numbers up to 15447 needs part number
31277680.
Chassis numbers from 15448 and beyond need part number
31406755.
Your Volvo chassis number is the last six digits of your Vehicle Identification Number (VIN number)
