To me it sounds like he wants to ban the likes of Tor rather than at-rest encryption. This would be a natural extension of the current situation where ISPs are required to block a list of websites containing the likes of child porn and bittorrent search engines.

I can see the government doing this with reasoning along the lines of "You don't need to hide if you're in a 'free country' like the UK, so UK ISPs can block Tor without impinging on the opportunities of whistle-blowers, informants or activists". Bullshit.