A party conference speech usually has several audiences – there are the loyal party members in the hall, there are the floating voters who will read the highlights of the speech in the newspapers, and then there are the speaker's fellow MPs. In his speech to the Conservative party conference yesterday, the Chancellor George Osborne was speaking to all three of those audiences and he had a subtly different message for each of them.

For the party loyalists, there was a promise of no U-turn on welfare reform. The proposed cuts to tax credits would go ahead, said Mr Osborne, because it was the only economically prudent thing to do. "You don't show your compassion by the size of the benefit cheque you dole out," he said, "rather you get people back to work." There is no phrase more likely to get the Tory loyalists tingling than "back to work", but Mr Osborne also said that, even after the cuts, a family with one person working full-time on the national minimum wage would be better off overall.

The problem with that analysis is that very few people agree with him, including the Institute for Fiscal Studies which has warned that 13million families will lose an average of £240 a year when the cuts come into effect in April and three million will lost £1,000 or more. The response of the government is to point to the introduction of what they call the national living wage, but the problem with the policy, welcome though it is, is that the minimum will take until 2020 to rise to £9 whereas the cuts to tax credits will happen in April. Even if we accept that the living wage is enough at £9, many working families will still face hardship after April.

The Chancellor's second message was for the floating voters across the country and his big idea for them was what he called a devolution revolution. He announced that councils in England are to be allowed to keep the proceeds from business rates and set their own rates, the theory being that some councils will cut to attract new jobs and regenerate their high streets while others in big cities might add a premium to pay for major infrastructure projects.

The idea has considerable merit and would represent a major transfer of power to councils. In calling it a devolution revolution, the Chancellor may also be revealing that he has one eye on Scotland, even though the policy only applies in England. When England's councils get their new powers and start using them, it will only emphasise how different the situation is in Scotland, where the government has demonstrated time and again its centralising tendencies and resistance to any kind of devolution revolution that involves Scotland's councils.

And what about that third audience: Mr Osborne's fellow MPs? In one part of his speech, he paid tribute to David Cameron and it was clear this wide-ranging speech was another part of a wider attempt to place Mr Osborne in pole position to take over from the Prime Minister, who has said he will be gone before the next election. But the image problem for Mr Osborne is far from solved, not least in Scotland. He still has a lot of work to do.