Relatively good on Encryption
Having waded through quite a bit of the report, three paragraphs in particular seem pertinent to the encryption debate:
13.11 ...There may be all sorts of reasons – not least, secure encryption – why it is not physically possible to intercept a particular communication, or track a particular individual. But the power to do so needs to exist, even if it is only usable in cases where skill or trickery can provide a way around the obstacle. ...
13.12 ... Few now contend for a master key to all communications held by the state, for a requirement to hold data locally in unencrypted form, or for a guaranteed facility to insert back doors into any telecommunications system. Such tools threaten the integrity of our communications and of the internet itself. Far preferable, on any view, is a law-based system in which encryption keys are handed over (by service providers or by the users themselves) only after properly authorised requests.
13.13 ...there is a compelling public interest in being able to penetrate any channel of communication, however partially or sporadically. ... Hence the argument for permitting ingenious or intrusive techniques (such as bulk data analysis or Computer Network Exploitation) which may go some way towards enabling otherwise insuperable obstacles to be circumvented
So, he seems to be saying that encryption should not be legislated against (as now), laws should exist to force people to hand over keys (as now, but step forward perfect forward secrecy) and GCHQ should be allowed to try to break encryption (again, presumably as now).
Laws forcing password hand over remain troubling, particularly for those of us getting older and more forgetful, but they have two big flaws from GCHQ's point of view; (a) they are expensive to apply so can't be done on a massive scale and (b) the suspect then knows for certain that they are being investigated. Otherwise, it remains that case that we can try to make our systems more secure and GCHQ can expend effort and money trying to break in - Game On!
Of course, this is all just a report with no legal powers from a lawyer who can be replaced if he starts saying too many sensible things. It remains to be seen if May and Cameron take any notice of it!