then some wealthy business donor has a quiet word to them because businesses need VPNs to function

A little credit here. They'd rephrase the law to only target VPNs whose purpose is offering as a service to the general public (as opposed to exclusively employees and contractors) the ability to connect to a private network with exit points / the ability to appear as if their traffic originates from outside of the UK.

On a related matter they could also require know your customer for all VPNs, require all VPNs keep logs available on request for police inspection and those who don't are banned. All companies keep extensive logs for corporate VPNs so this wouldn't present any additional burden to private enterprise but would be the end of anonymous VPN services.

I really don't think this is more of the spectacle and move on. Not this time. I think Palestine has them spooked because they lost control of the narrative and the best way to seize control of the internet and clamp down on people conveying information they don't like is starting with things like this.