The flip side of your view is that there are absolutely cases that are real, which don't even make it to the press at all. I was an expert witness for a terrorism case in the UK - the guy was convicted - and nothing about it ever surfaced in the media.
The reality is that there are a stream of people in the UK who try to carry out terrorist attacks, and who are stopped by the police. Attempting to argue against a bad policy by claiming terrorists are establishment propaganda is likely to be a bad strategy as a result.
A much better approach is to ask how many of these terrorists are really using sophisticated cryptography, and how many successful attacks would have been stopped if not for encryption? And there we find the answer is "not many" and "essentially none".
There is a great article on that very topic, written by a British journalist who also has acted as an expert witness in many terrorism trials:
http://privacy-pc.com/articles/how-terrorists-encrypt-threat...
It looks at many cases of busted terrorist attacks over many years, and examines the involvement of cryptography. The conclusion is that the intersection of terrorists and sophisticated users of encryption is the empty set. The closest you get is a groupie who worked on things like propaganda and funding, but who wasn't involved in any attacks themselves.
Now that article was written quite a few years ago and I suspect the new attitude of companies like Facebook towards encryption has changed the game somewhat, WhatsApp end to end encryption (assuming it's really on for everyone) makes it much easier to protect conversations than before so, it would stand to reason that cryptography does foil terrorism investigations more often than it used to. However, we don't know that, and the IC was yelling about the danger of cryptography for decades already - certainly in the time frame that Duncan Campbell's analysis was written in.
In conclusion, I'd focus more on whether real terrorist plots are happening successfully because GCHQ couldn't hack things fast enough, than on whether terrorists exist at all.