Labour leader’s campaign team say public argument with Sir Richard Branson has ‘done us a favour’, by highlighting Corbyn’s desire to re-nationalise railways

Jeremy Corbyn’s campaign team believe his public spat with Virgin trains boss Sir Richard Branson has boosted his chances in the Labour leadership race.

Sam Tarry, the Labour leader’s campaign director, told the Guardian that “from the point of view of the people we want to mobilise, Richard Branson’s done us a favour”.

Labour’s already fractious leadership campaign had become dominated in the last two days by the controversy.

Corbyn himself reacted angrily on Wednesday after being repeatedly asked about the row by journalists.

But Tarry, a Labour councillor in Barking and Dagenham with links to the TSSA transport union, insisted the public spat had helped Corbyn, by highlighting his pledge to re-nationalise the railways. Tarry had earlier described Branson as a “tax exile” who was “laughing all the way to the bank”.

Corbyn faced several questions over his account of sitting on the floor of a “ram-packed” Virgin service at an event on Wednesday, held to launch Labour’s health policies in London.

The rail operator disputed his story of being forced to sit on the floor of a crowded train, releasing CCTV footage of him apparently walking past free seats.

Confronted about the row, Corbyn repeated the explanation his camp gave on Tuesday night, saying: “I boarded a crowded train with a group of colleagues; we journeyed through the train looking for places; there wasn’t a place for all of us to sit down, and so for 40 minutes or so we remained on the floor of the train, in the vestibule.” He explained that a sympathetic train manager later found seats for him and his team, including his wife, by upgrading other passengers.

Asked about the issue again by a Sky journalist later in the press conference, Corbyn initially refused to answer. “Can we have an NHS question?” he asked. But he went on to say: “Yes, I did look for two empty seats together to sit with my wife, so I could talk to her.”

Corbyn added that he hoped Branson was “well aware of our policy, which is that train operating companies should become part of the public realm, not the private sector”.

Inside Corbyn’s team, key advisers were scrambling to understand how the row had run out of control on Tuesday, with some in the leaders’ office – which is run separately to the campaign – complaining of too much freelancing.

Corbyn’s leadership team are said to have become increasingly frustrated at aggressive briefings in the press, including against the deputy leader, Tom Watson, and general secretary, Iain McNicol, and suggestions that Corbyn could launch a “purge” of party figures if he wins the leadership election in September.

One Labour source compared the campaign’s chaotic approach to that of a “pound shop Malcolm Tucker” — referring to the foul-mouthed spin doctor in political satire The Thick of It. Another complained that the leader was impossible to reach for some time on Tuesday because he was making jam.

Corbyn was speaking alongside the shadow health secretary, Diane Abbott, at the health policy launch. The pair announced a series of measures, including a pledge to restore nurses’ bursaries and to attempt to buy hospitals out of costly private finance initiative contracts.

Student nurse Danielle, introducing Corbyn, said: “To take away the bursary will not only deter students, it is one of the most insulting things I have seen this government do since they came to office.”

Corbyn also said he would support a private members’ bill tabled by Labour backbencher Margaret Greenwood aimed at unpicking the internal market in the NHS.

That approach received support from David Owen, former Labour health secretary and one of the founders of the Social Democratic party. “For the first time in 14 years we have the leader of the Labour party today unequivocally committing the party to reversing the legislation which has created in England a broken down market-based healthcare system,” Lord Owen said.

“Surely now the whole Labour movement can combine together, left, right and centre to make this official party policy at this year’s autumn conference.”

However, there is still an open question over whether the conference will proceed, with the issue over what firm will provide security still unresolved, after the national executive committee voted to boycott longstanding provider G4S.

Key Labour-supporting unions Unite and the GMB are at loggerheads over the issue. The Unite general secretary, Len McCluskey, in a letter to the GMB’s Tim Roache, seen by the Guardian, said it was clear the conference would not go ahead following a GMB boycott.

“It is the responsibility of the general secretary of the Labour party, Iain McNicol, to implement decisions or to deal with any problems that may arise,” McCluskey wrote. “I am astonished that we are only four to five weeks to conference and that he has not done so.

“It is quite evident that in the event of a GMB boycott of conference, it simply won’t proceed and the blame would lay squarely at the feet of Iain McNicol.”

Separately, it emerged that Virgin Trains faces an investigation by the data protection watchdog over its release of the CCTV footage.

Officials at the Information Commissioner’s Office are making inquiries over whether the train operator, owned by Branson, broke the rules of the Data Protection Act, which governs the release of such data.

• This article was amended on 25 August 2016. An earlier version said incorrectly that Iain McNicol was the Labour party chairman.