There is no easy way to fund the health service, Downing Street has said in its defence of the Budget tax rises.

When the cabinet met on Thursday to chew over Gordon Brown's announcements, Tony Blair said there was "no cost-free option" and that there was a "national consensus that we have to pay more for health".

"The idea that there is a cost-free option is a fallacy," said the official spokesman. "Everyone recognises that as a country we have not invested enough in health and that has to change."

Investment in the NHS was only possible because of the strength of the economy, Blair had said. The increase in National Insurance contributions had been possible because of a background of the lowest interest rates for 40 years and low inflation.

The prime minister had argued it was also very different from the occasions when the Conservatives had raised taxes. It was not to pay for debt or cover the costs of a failing economy.

"It is not a tax increase for the sake of increasing taxes," said Number 10.

Health would now follow the same pattern Labour had followed in education - that there would be major reform coupled with investment.

There also came a stern warning to health workers not to expect bumper pay rises over the next five years.

"As we've seen restraint in private sector pay so we must see some restraint and discipline in public sector pay," said a Treasury spokesman who was at the Downing Street briefing.

"The government's view is that the most fair and efficient way to fund the health service is to do it through general taxation," he said, adding the NI hike had been done "reluctantly".

Gordon Brown had calculated that investment in health would be "fully funded" over the next five years through the tax increase aided by low unemployment and debt savings. This would be a period of "significant catch-up" and then investment would drop off as NHS reforms began to make savings.

Number 10 rejected claims from business that the Budget would cost jobs and even went as far as to use CBI figures in their defence.

There was a cost to the economy for the under-funding of the NHS and business was a customer of the NHS. The CBI had said that days lost to sickness cost the economy £11 billion.

"Business, like everyone else benefits from the health service," said the official spokesman. "If you're going to have a world-class economy you have to have a world-class infrastructure and that includes health."