SNP ministers can stop thousands of low income benefit claimants being hit by sanctions by refusing to share information with the UK Government, it has been claimed.

The Scottish Green Party today said that the Scottish Government could exploit a loophole in the devolution settlement that would make it impossible for the Department for Work and Pensions (DWP) to temporarily stop benefits as a punishment for failing to comply with tough rules.

While responsibility for the sanctions regime is not being devolved under the post-independence referendum package of further powers for Holyrood, responsibility over the Work Programme, which is supposed to help jobseekers find and keep employment, is being transferred to Edinburgh.

As failure to comply with the employability schemes is a primary reasons for sanctions, the Greens have said they could not be imposed if providers of the programmes were obliged by the Scottish Government to refuse to tell the DWP who had broken the rules.

Alison Johnstone, the party's Social Security spokeswoman, said: "Sanctions simply don't work. They do not help people into long-term employment and they clearly contribute to worsening physical and mental health. Scotland has an opportunity to take a different, positive approach.

"For the DWP to implement a sanction they need information from the provider of the employment programme. The Scottish Government could insist that programme providers do not pass information on. This already happens in a small way with young people involved in the Sector Based Work Academy, so there's no reason we can't apply the approach more widely. Preventing sanctions being implemented would send a strong message about fairness in our society."

The SNP has previously been a staunch critic of the UK Government's sanctions regime, which has been criticised for being overly harsh, punitive and arbitrary. The party last year called for an immediate halt to the policy for an independent review to be carried out, amid claims that DWP staff were being put under pressure to hit targets for the number of people whose benefits are stopped.

However, the Scottish Government last night showed little interest in an attempt to block the regime in Scotland, insisting Westminster would remain "entirely responsible" for the area and decisions after devolution.

The Greens commissioned new research from party supporter and academic Dr Dan Heap, estimating that 13,000 people in Scotland a year will face sanctions under benefits devolved to Scotland, costing those on low incomes a combined £7m annually. Benefits can be stopped, usually for between four and 14 weeks, for being late for appointments, failing to follow instructions or not updating a CV.

The report, Scotland Against Sanctions, claimed the punishments have increased hardship, fuelled the need for foodbanks, worsened health and had limited positive impact on helping claimants return to work.

Dr Heap adds: "Whilst the Scotland Act 2016 does not devolve the sanctions system, the operation of that system relies heavily on employment programme providers reporting sanctionable behaviour to the DWP so that they can apply sanctions. The Scottish Government could therefore oblige Scottish programme providers not to share such information with the DWP. This would insulate tens of thousands of non-employed Scots from sanctions every year."

Jamie Hepburn, the minister for employability and training, said the Scottish Government "remained critical" of the UK Government's welfare reform agenda but offered no commitment to explore the Green proposal.

He said: "None of the UK Government benefits being devolved to Scotland are part of its conditionality and sanctions regime. It is the case that Westminster will remain entirely responsible for decisions over an individual’s entitlement to working age benefits such as Job Seekers Allowance, and any decisions over sanctions in Scotland after devolution."