witholding your password or encryption keys has been illegal since 2000 in the uk under section 49 of the Regulation of Investigatory Powers Act 2000 , and by section 53 refusal can lead to 2 to 5 years in prison.
Not at all. It means that the UK police can compel you to turn over your decryption keys if it is deemed necessary and proportionate to prevent or investigate a crime.
Which makes the requested backdoor completely frivolous and something only criminals would need.