My guess: they keep you around on contract for 1-6 months because laying you off immediately would be very disruptive.

One company I worked for did this. It felt weird to everyone. But they did give a slightly better severance to those that stuck out their contracts so it worked out slightly better for them.

That's a UK legal thing: https://www.gov.uk/redundancy-your-rights/consultation

I think "entering into consultation" means HR calls you into a small conference room.