Derek Mackay announced last week the 1 per cent pay cap for public sector workers in Scotland will end.
He has now written to Philip Hammond warning the UK Government’s austerity plans will “harm the economy and public services” and calling for an end to the pay restriction.
Mr Mackay wrote: “I have seen the debate around public sector pay that is taking place across the UK and the divisions within the Cabinet on this subject. It is also clear that there are instances - such as the agreement for Northern Ireland - where the Treasury is able to identify additional resource to ease the austerity imposed by successive budgets.
“It is now imperative that you commit to ending unnecessary and ideological austerity. I believe this can be done within sustainable limits and the Scottish Government would be happy to share our proposals with you.
“As a first step toward increasing investment in public services, I urge you to lift the 1 per cent pay cap for public sector workers in public bodies reserved to the UK Government and to urge the independent pay review for NHS staff to do the same, just as I intend to do for the NHS and other employees of devolved public sector bodies in Scotland.”
Scottish Labour’s health spokesman Anas Sarwar accused the SNP of “passing on Tory austerity” and attempting to “con” voters.
He said: “This desperate SNP spin is just an attempt to cover-up the party’s support for Tory austerity, and its refusal to give NHS staff a pay rise this year.
“It’s a con trick that public sector workers won’t fall for.
“The facts are clear - the SNP’s own submission to the NHS pay review body recommended a 1% overall cost cap this year. And in May this year, the SNP voted down a Labour motion to give NHS staff the pay rise they deserve.
“The SNP’s budget for this year includes a £170 million cut to local services - ministers are simply passing on Tory austerity, not tackling it.
“The post-election U-turn by the SNP is welcome, which comes after voters sent Nicola Sturgeon a message to get back to the day job, but even (Foreign Secretary) Boris Johnson backs lifting the cap in 2018. Our dedicated NHS workers need a pay rise right now.”
Scottish Labour leader Kezia Dugdale has written to First Minister Nicola Sturgeon urging her to reveal more details of plans to scrap the pay cap, including how much extra money public sector workers can expect.