Great Train Snobbery! George Osborne embarrassment after sitting in first class with standard-class ticket

It is being dubbed the Great Train Snobbery or simply – and perhaps predictably – ticketgate.

George Osborne was facing acute embarrassment last night after his aides were caught demanding he be allowed to sit in a first-class train carriage with a standard-class ticket.

The Chancellor boarded the Virgin train to London at his constituency stop of Wilmslow with his aides. But rather than turn to sit in the second-class carriage for which he'd paid, Mr Osborne went right and took his place in the more salubrious and less crowded first-class carriage.

And there he remained until he was accosted by a ticket inspector who demanded he pay the £160 surcharge for first class. The contretemps might never have come to light if it had not been for an alert television journalist who happened to be sitting near by.

In a series of updates via Twitter, Rachel Townsend, who works for Granada News, wrote: "Very interesting train journey to Euston Chancellor George Osborne just got on at Wilmslow with a STANDARD ticket and he has sat in FIRST CLASS."

As news of Mr Osborne's embarrassment broke journalists rushed to get to Euston station in time to meet his train. A shaken-looking Chancellor decided not to use the public exit from the platform, which would have led him to the packed waiting area, instead walking through a security gate. But he failed to escape reporters who repeatedly asked him why he "could not just travel in standard class like everyone else".

He refused to answer – glared at reporters – and carried on walking. One journalist was manhandled out of the way by a man accompanying Mr Osborne. Keith Young, 60, a physician from London, was on the train. He said: "He had no right to make a standoff. Why did he buy a standard ticket [if he wanted to sit in first class]?"

Justin Bateman, 34, a civil servant from Manchester, added: "Fair's fair, he should be saving the taxpayer money. But definitely, he should not be sitting in first class."

The timing of the incident could not be worse for the Chancellor already under attack from Labour – and even his own backbenchers – for being an "out of touch rich-boy".

The incident happened on Virgin Trains – which was controversially stripped of the right to run the franchise before the Government admitted to serious mistakes in the franchise process. Labour seized on the row, with shadow Cabinet Officer minister Michael Dugher saying: "Another day, another demonstration of how out of touch this Government is. Just like Andrew Mitchell, George Osborne obviously thinks it's one rule for him and another for the plebs he's so keen to sit apart from. So much for 'we're all in it together'."

Bob Crow, leader of the RMT rail union, said: "This says it all about this rotten Government. Here we have a millionaire Chancellor who thinks he's above the normal rules and laws."