How did English policy towards the colonies change from 1650-1720?

During the time period that you are asking about, English policy towards the colonies first became more intrusive and coherent and then fell back towards an era of “salutary neglect.”

1650 can be selected as a starting point in part because this was the year after Oliver Cromwell took power in England after the English Civil War.  With regard to the colonies, Cromwell’s main desire was that they should be economically useful.  Therefore, he had Parliament adopt the first Navigation Act to force the colonies to ship their goods on English ships.  Later Parliaments enacted further Navigation Acts that increased the degree to which colonial trade was regulated. 
After the Glorious Revolution in 1688, the English government tried hard to have a coherent system of enforcing these acts.

However, things started to change in the 1720s.  This was largely because of a change in leadership in England.  Queen Anne died and the Hanoverian kings took the throne.  They were much less interested in the American colonies and enforcement of laws having to do with the colonies lapsed.  The English started to treat the colonies with “salutary neglect.”  This would be very important because it would lead the colonists to get used to ruling themselves. 

What prompted England's policy change toward the colonies between 1650-1720?

First of all, please note that there was not just one policy change during this time.  Instead, there were a few different changes.  The general trend in the changes was towards more English control over the colonies, but this went in fits and starts.  So far as we know, the changes were driven mainly by changes in political leadership in England and by England’s general desire to get richer and more powerful.

The general trend was caused by the idea of mercantilism.  The English felt that they had to have greater control over colonial trade.  This was because the theory of mercantilism said that a country became rich by exporting more than it imported.  The English wanted to exert more control over the colonies so they could control what the colonies imported and exported and who they traded with.  This would, it was believed, make England richer.

However, the details of the changes were affected to a great extent by changes in political leadership.  The changes began when Oliver Cromwell took power in England.  Then, for example, there was a major change in 1685 when James II came to the throne.  He tried to exert a great deal of control over the colonies.  This trend was reversed when the Glorious Revolution removed James from power.  The new rulers, William and Mary and the Parliament, tried to bring more coherence to colonial policy and make it more organized.

In short, then, the overall trend was driven by mercantilism while details of the changes were caused by changes in political leadership.