I wonder exactly how they would get you to pay back any monies. I very much doubt legal action. A strongly worded letter perhaps?

sounds more like HE is in trouble than you... he couldn't probably care less if you had to pay back money, that wouldn't be his problem, would it?
he's in trouble because if you say you dropped out due to lack of sufficient supervision/poor quality of project/design then he looks like an idiot and won't get any more funding for the next student he wants. if your funding agency wanted their money back i'm pretty sure THEY would be the ones sending you a nasty letter.

Hi , Since you got a new job and enjoying it , why worry about the past (the main reason of doing a phD is to get a good job for the future) . I would let your supervisor worry about the situation and let him take care of the problem. He probably try to scare you by telling you that you have to pay back the funding (which is a joke, as you have been working hard there for 3 years ) .

Have you read your MRC booklet of guidelines (I got one when I started), or contacted them?
You could contact the students union for advice maybe. I really doubt they could claim back 3 years money if you were actually using the money and working on a PhD. Having students not finish means funding may not be awarded to the supervisor/department in the future i.e. big financial repurcussions for the department. No money, no research, no reputation. That is your supervisor's/department's fault to some degree as they should monitor your progress and flag up any problems. You do not have the benefit of years of academic experience to know what will pass for a PhD.
P.S. my MRC funding went on a completely different project to the one they funded and it wasn't an issue.