I was first exposed to this step when i enrolled in Manchester for my PhD. The entry document said that I was enrolled for an MPhil, NOT an PhD. It is only after 1 year of study and then presentation to a mini viva committee, that I will be allowed to go forth to do a proper PhD. Same thing happened at Kings as well.
The idea is, what's the point behind this? Well, the idea is that why get people to go through the entire course and only to drop out? To give you an example, about 27 students started my PhD course and I think 3-4 people are left. It is a huge loss of money and time. Think about the students who did not get a chance...
So when I read this, I think, yes, definitely makes sense. If the student is going to drop out, then what's the point in enrolling them? none whatsoever at all. So just pick students with higher grades who are more likely to complete the course.
Why force people to study when they cannot/do not want to? Put them into vocational training... (and stop giving them benefits when they clearly do not want to work, why is it MY problem if they do not want to work?)