The RIPA came into effect in October though it's retroactive so the police have the right to any and all encrypted data if they have "reasonable suspicion" believe it would be helpful for “preventing or detecting a crimeâ€. If you fail to hand over the keys it's 2 years for normal crimes 5 if it's terrorism related. The first target for this is an "animal rights activist" most of these sorts deserve anything they get but then this is probably only the first of many cases where police snoop around a pc find something they want a butchers at then demand the keys. What happens if you didn't generate the keys or if it's some file you can't decrypt anyway is not clear, but I suspect it involves a few years behind bars for anyone unfortunate enough to get collared.
It also makes direct abuse of this act possible, all someone has to do is stick a junk file sufficiently coded to look like an encrypted data file labelled "My secret evil terror plans.pgp" on a computer grass them to the fuzz in such a way that their computer gets seized and the person gets 5 years. It's very unlikely there would be any way to prove it's not what it says it is or that the person in question didn't create it or have the keys to decrypt it.
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That's bonkers.