This is about the astonishing lack of ability in the political class in the UK. The security services are honestly wagging the dog and they think they can force some kind of key escrow eventually, but instead they’ll just destroy software development in the UK and possibly financial services.
It’s the same with the multi billion ID cards and digital ID which is almost impossible for a government as incompetent as this one to implement.
And whatever is foisted on the public will be so insecure you’ll have to deal with your identity constantly being stolen, and it being your problem to fix it.