This is an expansion to the answer given by DJClayworth above, since he quotes a less than relevant part of the law.
The passage given by DJClayworth describes an afirmative defence against request under section 49 of the law quoted. Section 49 is at http://www.legislation.gov.uk/ukpga/2000/23/section/49 .
Section 49 states, among other things;
(2)If any person with the appropriate permission under Schedule 2 believes, on reasonable grounds—
(a)that a key to the protected information is in the possession of any person,
(b)that the imposition of a disclosure requirement in respect of the protected information is—
(i)necessary on grounds falling within subsection (3), or
(ii)necessary for the purpose of securing the effective exercise or proper performance by any public authority of any statutory power or statutory duty,
(c)that the imposition of such a requirement is proportionate to what is sought to be achieved by its imposition, and
(d)that it is not reasonably practicable for the person with the appropriate permission to obtain possession of the protected information in an intelligible form without the giving of a notice under this section,
the person with that permission may, by notice to the person whom he believes to have possession of the key, impose a disclosure requirement in respect of the protected information.
The language to note is "on reasonable grounds". IANAL, however I take this to mean that the police must have reason to believe that the noice on your hard drive is encrypted information connected to their "proper performance"; and that they must be able to demonstrate that reason.
In short it's insufficient for the police to say "Give me the key to this encrypted information". It's insufficient for them to say "Give me the key to this encrypted information because I believe it to be connected to the case I am working on". They need to be able to say "Give me the key to this encrypted information because I believe it to be connected to the case I am working on. And I believe this because of ...". I do not know what standards govern the things that go into the dots.
If they are able to do the above the sections contested by DJClayworth and Konrad Rudolph comes into play meaning that if you can show that you do not have the keys; for example if you can show that the "encrypted data" is in fact a recording of background astronomical noise, which you keep as a source of entrophy, you would not be liable to hand over the key because you are not in possesion of such a key. - For this you need to have sufficient evidence to cast doubt on the issue of you having the key, and for the police not to have evidence that you have to key.