Clearly, the Scout leadership has abdicated to the anti-knife hysteria in the U.K.
Sadly I have to agree. Even though the article cites the law saying that small, folding blades are OK, their own guidance makes no distinction.
I don't know how much standing this has. It is described as "guidance", so hopefully individual troop leaders are not required to follow it. It may only apply as a default position for leaders who don't have an opinion of their own. Also I imagine (and hope) it's only a handful of people at the top of the UK scout movement who think like this.