An 11% rise in firefighters' pay over two years coupled with radical modernisation of their working practices has been proposed by a controversial review of the fire service.

The inquiry, chaired by Sir George Bain, said there was the opportunity to greatly improve the UK's fire service and save brigades millions of pounds.

Bain proposals

11% pay rise over two years Changes to shift patterns Charges for false alarm calls Insurance firms charged for road accidents Extra medical training for firefighters

Deputy Prime Minister John Prescott embraced the proposals, which could result in up to 3,500 job losses, as a "fair deal".

But the Fire Brigades Union (FBU) has refused to recognise the review, which is expected to fuel the ongoing pay dispute that has already seen three strikes and two more planned for the New Year.

Among the most radical proposals are the suggestions that insurance firms could be charged to help cover the cost of traffic accidents and that people could be made to pay for false alarms.

The report - welcomed by Downing Street as an "important and serious piece of work" - recommends a 4% pay rise this year followed by 7% next year.

Sir George said the settlement would be self-financing within three to five years - but only if all his recommendations for reform are accepted.

The changes would not require compulsory redundancies, Sir George said, because of the large numbers of firefighters due to retire over the next five years.

'Best practice'

Although Sir George said he was not making a judgement on the current dispute between the FBU and employers, he told BBC News that his report contained a possible solution.

He said: "It's been made clear by the government, by employers, that there is more money on offer for fire fighters, but it has to be offered in the context of a reformed fire service."

The report said the fire service needed to be changed "from top to bottom" with every aspect of its work reformed "to bring it into line with best practice at the start of the 21st century."

Speaking in the Commons on Monday afternoon, John Prescott endorsed the report and agreed it was time to meet the challenges it presented and begin a process of change.

Sir George Bain says the fire service needs transformation

A White Paper setting out legislative and other changes needed to reform the fire service would be published next spring, he said.

A small amount of transitional funding for the three-year pay deal proposed by Sir George may also be provided by the government.

Mr Prescott told MPs: "The report provides a fair deal for firefighters, a fair deal for other workers and a fair deal for the economy."

Sir George had earlier said the government may need to provide around �35m to meet any shortfall in salary funding before efficiency savings kicked in.

His report also suggests more fire prevention work, changing shift patterns and better allocation of resources allowing "plenty of scope to drive down fatalities, injuries, loss of property and damage to the environment to negligible levels".

Sir George stressed modernisation would also bring higher pay and better opportunities for firefighters wanting to develop their careers.

He said the service could be transformed "from an old-fashioned, white, male-dominated, manual occupation to one with decent conditions and family-friendly policies".

'Hand in hand'

Welcoming the report, the fire service employers' negotiator John Ransford said: "Pay and service change must go hand in hand - they're interdependent - this report says the same thing really and we must find a way through on that basis."

He said the employers would discuss the suggestion of an 11% pay rise when they meet on Tuesday.

Two more strikes are planned in the New Year

The FBU - which originally demanded a 40% pay rise but has since indicated it would settle for 16% - has called the 11% offer "derisory and insulting".

It has dismissed the report as "irrelevant" and "wholly biased", despite government insistence that although it appointed Sir George he has operated independently.

But Sir Jeremy Beecham, of the Local Government Association, told BBC Radio 5 Live he hoped the fire union would at least consider the proposals.