In any sane universe, something called the Housing and Planning Bill might safely be assumed to stimulate house building and improve planning. But the bill, which receives its third and final reading in the House of Commons today, does exactly the opposite of what it says on the tin. It will exacerbate the housing crisis and further enfeeble the planning system in ways we cannot yet comprehend.

The primary assault on social housing has been much discussed in these pages. The bill’s flagship measure – promoted at ownyourhome.gov.uk – will replace genuinely affordable homes with public subsidies for property investors. Rather than building homes for affordable rent, the legislation will force local authorities to build “Starter Homes” for first-time buyers. Capped at £450,000 in London and £250,000 in the rest of England, these homes will be unaffordable for people on average incomes in over half of the country, as Shelter has pointed out. Buyers will be free to sell their assets after five years at full market value, thereby minting a new generation of property speculators and removing any long-term benefit for future first-time buyers.

In addition to this, the bill will extend Right to Buy to housing associations, further depleting the number of homes for social rent. It will also compel local authorities to sell their highest value housing stock and pass the proceeds on to central government. Given that these high value areas are already subject to the greatest pressures on affordable housing, the effect will simply be to remove resources from the places that need it most. It will see British cities divided further into segregated enclaves for rich and poor.

The bill will bring an end to secure lifetime council tenancies, replacing them with two to five-year tenancies, and force those with a total household income of over £30,000 to pay market rents – hitting low-paid working families hardest.

In short, it is a raft of misguided measures that will only increase housing inequality. As campaign group Architects for Social Housing – demonstrating outside Parliament today – puts it, the bill is “an extremely subtle and duplicitous piece of legislation that in almost every aspect does something very different, if not the direct opposite, of what it is claiming to do.”

But the planning side of the bill has yet to receive the attention it deserves, in either the Commons or the national media. The proposed changes are shrouded in a haze of intentional ambiguity, but they threaten to eat away at the last shreds of the democratic process that safeguards how our communities are made, putting power instead in the hands of developers.

The most radical measure is the introduction of automatic planning permission in principle on sites allocated for development, without applications being subject to the usual rigours of the planning process. When the idea was mooted in October, ministers suggested it would initially be limited to proposals for housing on brownfield land but nothing in the legislation prevents it from being applied to any kind of development on any site.

“It is extremely dangerous,” says Hugh Ellis, policy director at the Town and Country Planning Association. “It could apply to all forms of development – for example, fracking could easily be given ‘permission in principle’ as part of a minerals plan. You can’t make a decision in principle about a site until you know the detail of its implications, from flood risk appraisal to the degree of affordable housing. Giving permission in principle would fundamentally undermine our ability to build resilient, mixed communities in the long term.”

Ellis fears that the bill marks the introduction of a “zonal” planning system, along US lines, whereby land is zoned for particular uses at a broad-brush scale and permission granted without the finer-grain negotiation of applications on a case-by-case basis, which has always defined the English postwar planning system.

“Zoning is one of the major contributors to the economic and social segregation of cities in America,” says Ellis. “If the government is going to make such a fundamental change to the planning system there needs to be an enormous amount of public debate and research. The future of British cities is at stake here, but there’s been no white paper and no public discussion at all.”

Lack of debate seems to characterise the entire bill, which saw several crucial amendments slipped in under the radar just before Christmas. In a change that opens the door for the privatisation of the planning system, communities secretary Greg Clark added a clause in December to allow the “processing of planning applications by alternative providers”. Rather than submitting a planning application to the local authority, it suggests that developers could assign a “designated person” to process the application for them instead.

Dr Bob Colenutt, planning expert at the University of Northampton, describes the move as “iniquitous”. “It will replace a public-sector ethos with a developer-led ethos,” he says. “The ‘designated persons’ are likely to be consultants who also work for the private sector, which introduces probable bias and reduces the public scrutiny trail. And it is very likely to reduce the right that the public has to make comments on planning applications.”

In the same way that developers’ financial viability assessments have been hidden from public view, it could mean that the entire planning process happens behind closed doors, with applications assessed by private consultants, paid for by the applicants.

“The question is, what problem is this really trying to solve?” asks Janet Askew, president of the Royal Town Planning Institute. “Local authority planning departments are critically underresourced, so if it’s a question of them being too slow then the government needs to increase their capacity, not strip it away further.”

Elsewhere in the bill, if local powers aren’t being handed out to the private sector, they’re being trampled by central government. Independent planning inspectors will be bypassed in a measure that lets the secretary of state intervene in the assessment of local plans. Another clause introduces a new power that will allow the government to produce plans for areas where it deems the local authority to be “failing or omitting” to do the work.

“It is all profoundly undemocratic,” says David Vickery, a recently retired senior planning inspector. “The bill represents a significant centralisation of powers by government to micro-manage planning, without thinking through the consequences. It reads like a panicked reaction to current low housebuilding rates, and the fact that the government doesn’t trust anyone other than itself to do the job. It proves that localism is dead.”

By further diluting the planning system in the name of “cutting red tape”, the government has picked the wrong target once again: the problem isn’t with planning, but with developers sitting on land. DCLG figures show that planning permission was granted for 261,000 homes in the year ending March 2015 (against the need for at least 240,000 homes per year), but only 125,110 homes were actually built. Put simply, 136,000 more homes were consented through the local planning system than were built by house builders. And, as a recent Guardian investigation revealed, the UK’s biggest developers have a land bank big enough for 600,000 new homes. It might be an idea to get them to use it. Instead, this bill represents a wholesale power grab, transferring both housing assets and planning powers from public to private hands in a drunken festival of deregulation.