The proposal is to make it possible for domain registrations with .uk as well as .co.uk and org.uk etc. The main problem is the lack of domain availability in the uk namespace and the original proposal would have given people the opportunity to register a name they desired as preference would have been given to people who could show some entitlement to it such as being a registered trademark or name of a community group for example.
Due to pressure from domain prospectors however nominet has abandoned this idea and instead is proposing that exiting domain owners get first refusal on new .uk names. So for example because Apple Computer has apple.co.uk it will automatically get the right to register apple.uk even though there are many other legitimate uses for the domain such as apple windows, apple records or simply someone wishing to set-up a web site about the fruit. Under the first proposal each of these groups would have had an opportunity to register the name.
The new proposal however is the existing registrant of a .co.uk or .org.uk will get the chance to register it making it nothing more than a nominet tax as each registrant will feel obliged to register a .uk version of their domain and it offers no advantage other than to create revenue for nominet.