Well, I dont know much about renaults but £1200 seems an expensive price for such work. My local parts store have the timing kits for £78 inc VAT obviously a genuine renault kit would be more but not that much.
In much humble unqualified opinion if the belt was done as a regular interval change and was part of the normal service proceedure and the car prior was running fine then they should accept liability. But pound to a penny they wont.
You could try to seek some leagal advice, but i dont know if they have the right to keep your car. If they released it to you and then it failed surely there was a parts and labour warranty/guarentee provided by the garage when you paid for the work.for £1200 I would want a good warranty from them.
I am quite local to you and there are some good garages around, I do most of my work myself but things like timing belts go to a local garage i know well.
Which belt did they say had shredded? The timing belt? Aux? If its a shredded belt surely its a parts failure and they supplied the parts so are responsible.
As for a fitting new engine, it depends on what the damage ison the original. It can vary from not much if your lucky to catastophic. I am sure more professional users will be here soon to provide more info, but if you want to know the good local garage I use PM me and ill give you there details
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