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Well doesn't this just look like a total nightmare waiting to happen...
It's impossible for the Home Office to meaningfully end free movement in a no deal scenario.

a) They need to have registered EU citizens already in UK before they can enforce new regime

b) they don't have a new system up and running.

So here we have the Whitehall workaround...
Clearly decided temporary continuation of free movement as now was a non-starter - politically difficult for immigration to continue unchanged but Spanish satsumas get stuck at the border.
What we have is a complicated stop-gap, released the day before the big vote, which if implemented simply stores up problems for further down the track.
In practice nothing changes for EU citizens.

They can still enter the UK in the same way.

They can still get jobs, access services or housing in the same way.

But after 3 months they have to ask the Home Office for permission to stay for another 36 months.
It's essentially a registration scheme - there will be some basic identity, security and criminality checks.

In practice it means very little though.
Home Office won't be able to tell the difference between someone who has lived in the UK for 20 years but hasn't yet applied for settled status and someone who arrived 5 months ago but hasn't applied for this new status.

That means it's just not enforceable.
Until we get to 2021 onwards. At which point the HO will start enforcing the new immigration regime for EU citizens.

But there will be a whole load of people who arrived after March who either won't be registered (for good and bad reasons) or who fail to meet new criteria?
There will be a big increase in 'illegal immigrants' as per Home Office definition - those without the right documentation

So what will Home Office do? En mass deportations of EU citizens?
Rather than accepting the uncomfortable truth that free movement will need to continue temporarily, we've got some new status that means it basically continues in practice but potentially stores up huge problems for further down the line.
These sorts of issues will be big focus of forthcoming @instituteforgov paper on migration after Brexit
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