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Keith Hill, the recently appointed planning minister, last week announced yet another step in the government's tortured attempts to formulate policies to support and implement John Prescott's communities plan. Like their other policy announcements to date, it will have the opposite effect to that intended.

Housebuilders' attention will, inevitably, be focused on the proposed change in the rules governing affordable housing. The government has long been anxious to shift much of the burden of providing subsidised homes to the private sector. It claims that this is inherently virtuous, asserting that occupants of different social and tenure groups do not make bad neighbours, and that that is what social inclusion is all about. Now sites as small as half a hectare will have to contain an affordable component. The intention is to bring more schemes within the net and thereby increase supply – although it can only be at the expense of open market housing, unless total numbers are increased. Peter is being robbed to pay Paul.

However, slipped in alongside it is the discretion for local authorities to adopt an even lower threshold if they wish – provided that it increases the supply of affordable housing and has no adverse effect on overall supply.

This made me wonder what standard of proof might be required to determine the lack of effect on supply – but not for long. Because I next read the Partial Regulatory Impact Assessment that accompanies the consultation document, in which the Office of the Deputy Prime Minister explains the likely effect of its policies.

Any suggestion that the policy package might reduce landowners' or developers' willingness to play ball is blandly dismissed with a reference to alleged improvements in certainty, speed of plan-making and some – unspecified – test to ensure that the policy is implemented in ways that are compatible with the viability of private sector housing and will not reduce housing output. So that's all right, then.

If the level of proof required of local authorities is as rigorous as that adopted by the ODPM to assess its policies, the 0.5 ha threshold will clearly be the exception rather than the rule.

However, it is the wider package that worries me more. The government is obsessed with the idea that housebuilders are "building the wrong sort of houses" and the revised planning guidance is intended to ensure "that the size and type of housing better matches needs, especially by providing new homes for the increasing number of smaller households".

The ODPM is reinforcing its failed policies at every level, and is seeking to secure increased housing output by a degree of micromanagement of housebuilders’ production that is unprecedented in this country

As a result, the ODPM is resolutely reinforcing its failed policies at every level, and is seeking to secure increased housing output by a degree of micromanagement of housebuilders' production that is unprecedented in this country.

True, it reviewed its key policy for housing – PPG3 – which all the evidence shows has been primarily responsible for the drying up of supply. It concedes that local authorities have been slow to bring forward up-to-date plans, and have misunderstood its key message: that is, "brownfield first", not "greenfield never". Nevertheless, it declares PPG3 a success and proposes strengthening and reiterating its aims. Apparently the logical purity of policy is all that matters, regardless of any common-sense questions about how it will be implemented by local authorities – many of which do not share the ODPM's objectives and will continue to abuse any powers they are given to block development.

Combined with other policies that prescribe densities, and the stiffened policies on affordable housing, local authorities are now to be encouraged to determine the product mix – and all this within a policy framework that is, deliberately, highly discretionary at the local level.

Even if the ODPM won't acknowledge it, what PPG3 has done is give local authorities access to policies that they can use to reduce housebuilding. The ODPM does not seem able to grasp that, in many of the areas in which housebuilding output most urgently needs to be increased, the shortage of new homes is the direct result of local authorities abusing the tricks – sorry, policies – made available to them by the government, such as the sequential test, which enable them to stop sites, even brownfield ones, coming forward. They do this because they do not want any housebuilding, full stop.

Keith Hill's package adds to councils' range of blocking and controlling devices because it enables them to specify a type and mix of development that may not be commercially buildable – a weapon that the ODPM piously and foolishly believes they won't use.

Private capital ultimately cannot be dragooned in this manner and I have not been surprised to find myself talking to a number of housebuilders recently – mainly the medium-sized, so far – who see no scope for expansion of their business in this policy climate and who are actively exploring the investment of their capital in Europe, the USA and even China. I anticipate further disinvestment over the next two years.