If someone is accused of terrorism (however flimsy the accusation), that's now enough to damn them in your eyes and strip them of their civil rights, that's quite dangerous and open to abuse.
You can now be jailed for withholding a password, without evidence that any crime was committed.
"He was already in jail for being part of a cell that considered attacking a Territorial Army base in the town."
or this part of the story:
"Hussain and three other men were jailed in 2012 after admitting discussing attacking the town's TA headquarters by placing a homemade bomb on to a remote controlled toy car."
Not exactly a flimsy accusation. They had ample reason to believe the USB stick may contain additional plans for other attacks. Without knowing if there were others involved, I'd say they were right justified in what they did.
And it seems to mean that any password can now be presumed to be incriminating evidence. What happens if my company gets investigated for some financial fraud and they find a forgotten password protected usb stick in the back of a drawer. Now the prosecutors can threaten me with jail time unless I prove that I do not know the password to that usb stick. How can I begin to mount a defence to that? That presumption of guilty until proven innocent is whats wrong here.
You leave a lot of details out of your example. Such as, where you low level developer or a financial officer responsible for the company finances? If you were the latter, there would be ample suspicion to think a locked USB stick in your drawer would be useful evidence in the case. If you were a low level developer, probably not so much. You have to build context to determine if someone should be considered suspicious.
Obviously it isn't enough to say "I reckon he's a bad man, strip him of his rights", but once someone has been convicted, there are certain rights that they rightly lose (e.g. if they are given a custodial sentence, they no longer have liberty).
There may be arguments as to why this should be a right that even convicted criminals should retain, but that is a totally different argument to whether an accusation is sufficient to remove someone of their right to privacy.
Under UK law (RIPA), I think he is. If he is accused of a crime, and the police want him to decode information, he has no recourse and will be sent to jail for not doing so.
Don't equate the term "accused" with the term "convicted". They mean totally different things.
What I was trying to get at was that the word terrorism has been used to scare people into judging others when in fact there is no solid proof - for example in the case of David Miranda, his rights were infringed on the basis of an accusation of association with terrorism. Sorry I didn't meant to imply that in this particular case the man was only accused, not convicted, though it was not an act of terror, only being involved (how involved?) in planning an attack.
There are degrees of evil when it comes to attacking other people, from association, through proven plans, through actually carrying out an attack (which is far worse). I think it's important to distinguish these degrees and not switch off all judgement when the word terrorism is mentioned, and I don't think that your rights should vary depending on which category of person you are - everyone should be equal under the law. The most evil criminal in our country should have the same rights as everyone else, because otherwise everyone's rights will gradually be eroded.
This is a sorry state of affairs, leaving us in a situation where all we can do is trust the judgement of those in power not to abuse it (not much hope there), and the judiciary to keep them in check if they try (only slightly more hope there).
I agree that there often seems to be a bit too much waving around of "terrorism" to justify government infringement of rights.
However, I still disagree with your assertion that the most evil criminal should have the same rights as the rest of us. This should certainly be true until conviction and once their conviction is spent, but as I mentioned before, a convicted criminal (in the case of a custodial sentence at least) quite rightly loses freedom of movement. Freedom of association is rightly withheld from prisoners released on licence. Convicted prisoners also lose the right to vote, which is arguable as to whether or not that is right.
There is clearly a list of rights that can rightly be withdrawn from convicts, so the question is which rights belong on that list and which ones don't? Bear in mind that poorly worded laws such as RIPA may come about because of a desire to keep that list as short as possible, constraining the rights of all of us, instead of just those who have, by their own conscious action, infringed on the rights of others.
I think RIPA came about more as a way to make the work of investigators of terrorism easier, and it was just badly written and too broad.
http://www.legislation.gov.UK/ukpga/2000/23/section/49
note that forgetting the password is supposed to be a valid defence!