It's quite true:
"someone can tell you whether you are a contractor or a deemed employee"
Yes, in UK, because of iR35, the client/employer decides if the contractor they hire (independent worker) is deemed employee (so inside IR35) or real contractor (outside IR35), the contractor has no say in this. If the client/employer says you're out of IR35 and the tax man thinks they're wrong, there's a penalty for the client/employer. As such, most clients/employers deem all freelancers inside IR35.
"as a deemed employee you actually don't have any employment rights"
Exactly: inside IR35, you pay the same tax as perm employees but get no insurance, no NI, no holiday, no job security (they can fire you today, with zero notice). But you're still a company performing the work so you must have a £1m professional insurance, accountant and the rest.
"This law has been created to ensure IT talent doesn't leave big consultancies and create competition cutting out the middleman"
Kind of true: you and 3 friends start a LTD company not to build/sell software products but provide software development services, your clients must decide if you're deemed employees or not, your clients fear the tax man so they'd rather say you're inside IR35. As such, you and your small company end up unable to compete with the big guys because your actual tax is not 20% but more like 35-60%, not on profits but on income, because all 4 of you pay like employees, not like business owners.
I'm not sure-sure this has been created specifically to kill competition of Accenture, Avanade, Wipro, etc., but it helps them greatly.