Brexiteers have long been irritated with the EU's free movement of people, which allows anyone to move at will to any part of the EU. It resulted in a lot of low skilled workers coming to the UK. What they wanted instead was a points-based system like the one operated in Canada and Australia, where people with desired skills are let in and everyone else was kept out.
The EU has been hoping that as part of any deal Britain would continue to give Europeans preferential treatment even after Brexit - and a couple of times Theresa May hinted that she was open to this if it meant getting a deal.
All that is now at an end. The cabinet has agreed an immigration plan based on skills - and crucially it will treat all foreign people alike. So someone with skills from the USA, India or France will be treated identically. And people with no skills from those places will also be treated the same - they will all be kept out.
It's a step in the right direction: it's non-discriminatory and it prioritises skills we need while preventing an underclass building up of unkilled workers (given the march of automation, it will be hard enough to employ our own unskilled workers let alone the ones from Europe who have accrued residency rights here).
More to the point - by deciding to announce this now, it looks like the Cabinet has decided that there won't be any deal, so they might as well have the immigration policy they (and the voters) really want.
The European Union is still attempting to keep the UK in the customs area and single market - which requires the UK to keep free movement of europeans. But this nixes it once and for all.
