Ticket splitting is a known way to get cheaper rail travel.
You don't always have to switch trains as well. You could go on the Manchester -> London train, but buy multiple tickets for the same train. You could get a ticket from Manchester to Stoke-on-Trent, and then a ticket from Stoke to London on the same exact train, and it could still be cheaper.
Why it's cheaper, I don't know. Just one of the many things wrong with rail travel in the UK, especially with Virgin who pretty much have the monopoly on the rail network.
I use my rail card religiously when travelling. Anywhere North of Manchester to travel to London costs a fortune. It would cost me £86 or a return ticket, yet with my rail card, which costs £28 a year, I pay £54 for a return ticket now. Pays for itself in a single journey.