As reported in the BBC, a 19 year old man has been sentenced to 16 weeks in prison for refusing to decrypt files on his computer.
From any legitimate perspective, it is a pointless approach. If somebody refuses to decrypt files because the material is perfectly legitimate but highly personal, such a sentence is an immoral attack on somebody attempting to defend their privacy. If somebody refuses to decrypt files because the material is evidence of serious criminal activity, the sentence serves no real purpose, as it's still preferable to disclosing the material and receiving a much higher sentence.
The obvious, but deeply unpalatable solution to the second possibility, which has already been proposed, is to increase the sentence to at least the level of the offence that may be associated with the encrypted material, but that would make the injustice of the first possibility even worse.
The only real purpose I can see for this law is to enable the state to outlaw privacy as and when it sees fit.