There is no payment for fire prevention work or for the service's major growth area, attending major incidents like motorway, rail or air crashes. Consequently brigades which strive to reduce the likelihood of fire or indeed hoax calls are in fact penalised twice over - first that the initiatives attract no money and second that if successful their funding is cut.
Yet prevention has had a dramatic effect in reducing fires. West Midlands, the only one of the 54 brigades in England and Wales to have undertaken major prevention work, has reduced its casualty rate by 70 per cent over four years.
Yesterday Andrew Foster, controller of the Audit Commission - the independent body which monitors public services - said its success could be achieved around the country. But outdated government controls and rigid national standards for firefighters which have their roots in the 1930s and 40s, mean most forces have little room to tackle local need.
Pre-war risk assessment means that brigades are still primarily geared up for a swift response to commercial city centres - the A risk category - whereas research now showed that those most at risk of fire and death were those in inner-city and suburban residential areas, categorised as B and C risk.
Nevertheless, the Fire Brig-ade meets its national response standards in 95 per cent of cases and is justifiably held in high public esteem, it concludes.
"The overall picture is one of failure by the nation to respond to a fire problem that each year accounts for 600 lives and almost £5bn. The fire service may be doing things right, but it is constrained from doing the right things and it is not supportedin its efforts by a broadly based campaign to combat fire such as that in the USA," says the report.
Adding to its problems, the Fire Service is also facing a financial crisis in what the report calls "a pension time bomb". Unless urgent action is taken in a few years, one-quarter of the £1.25bn fire service budget will be going to pay the pensions of its retired workforce, placing its front-line services at risk.
The Fire Brigade pension fund, like that of the police, is funded out contributions paid by the existing workforce. Like the police, it has reached a phase where demand from those who have retired exceeds income.
The report, based on research by the management consultants Ernst & Young, says the pension problems need tackling urgently before it affects the service firefighting duties.
It also calls for a fundamental change in the law making it statutory for fire brigades to promote safety; updating the fire-risk categorisation, giving brig-ades greater freedom to tailor their services to the needs of local communities; and overhaulingthe funding system to encourage brigades to reduce fires.
At a local level, it estimates that brigades could make savings of up to £67m a year, by reducing staff sickness, reducing the number of middle-ranking firemen, slimming down management, and greater collaboration between brigades on control rooms, recruit training and purchasing.
The report concludes: "The inertia of recent decades cannot continue. The time has come to modernise the national framework and allow brigades to change - in short to create a fire service for the 21st century."
n In the Line of Fire. Value for Money in the Fire Service; Audit Commission; HMSO; £10.Reuse content