That's a
very misleading quote.
The new Home Secretary wants to institute a different regime from day one of no deal, which deviates from original plans and creates a whole range of issues for EU nationals with and without settled status who are resident.
While it is aimed at voters to show that they'll be treating new arrivals differently, the systems and laws and all of the bodies that deal with EU nationals are not equipped to differentiate between existing residents and new arrivals.
Only about a third of EU nationals have applied for settled status and this new messaging from the incoming Home Secretary is saying the hostile environment measures must be eagerly applied to all EU nationals without it. Employers, landlords, banks, health service providers and border officials all have the burden to verify a person's legal status and the majority of EU nationals will be unable to demonstrate their status from day one. Their status furthermore isn't protected by primary legislation and for most people only amounts to being in a digital system that must be checked online.
Most parties involved in having to check resident's status is not trained in doing that, in so far it is even practicable from day one of no deal. And it most certainly will create discrimination, making it more likely that those that have a harder time demonstrating their rights will be unfairly rejected or skipped over, or be faced with additional burdens to prove status.
The real world consequences for people affected could be not finding a place to rent, being evicted, losing a bank account or being unable to open one, being denied health services or being asked to pay for services that should be free, being denied a job, being let go, or simply being skipped over by employers. This all can happen to people who have been in the UK for decades but are unable to easily demonstrate their status. This is not hypothetical stuff, this already happens but the occurrence would jump up by an order of magnitude as the result of the course taken here.