Apologies; checking back I see I misread the numbers for Merseyside. GM bus use declined by 8 per head from 80 to 72.
In general though; the strongest modal competition for stopping bus within Manchester is private car use, especially the large number of very short distance car trips at peak periods. This is the other side of the coin; the dominant dynamic factor in overall transport demand is the rapidly reducing attraction of car use for more affluent and better educated populations. But amongst lower income households (the classic bus user market) the countervailing attraction of car use remains much stronger. Less affluent households who acquire access to a car or van tend then to use it for most of their travel trips.
So Metrolink has been very successful in abstracting from car use in more affluent areas of Greater Manchester ; but car use remains resistant to bus competition in less affluent areas. The question is whether a franchised network (or otherwise re-regulated system) could boost bus use. I take the recent numbers fro Bristol as indicating that this is at least a possibility.
Overall, I agree with all of this. The problem being that private car was virtually the *only* modal competition pre-deregulation AND its time and (variable) cost advantages were much narrower then. The initial failure of Dereg was that the "David's" were driven by revenge against the "Goliath's" they used to work for, and not by growing the industry at the expense of private car use. Although, early morning, late evening, Sunday/PH and many peak only services were butchered overnight, the one saving grace was that it was the better off, high car ownership areas that saw the biggest cuts. You are also right about the less affluent needing to acquire cars/vans because they are more and more constrained in the labour market and indeed accessing health services (partly because they too are being slashed and concentrated in remote (tertiary care) and more affluent (secondary care) locations, as well as the weekly shop. If you are on £7.35 per hour (or whatever NMW is) and possibly zero hours contracts, then if you are forced to shell out a fortune to acquire, tax and insure a car, then you are hardly going to use public transport that is most cases is far more expensive and far slower - if it even runs at the times you need to travel! Digressing slightly; I don't think many people travel by bus for "only two stops", for this reason. Not only that, if they are too lazy, or genuinely unable to walk 500-600 metres along a main road, they are hardly going to walk a slightly shorter distance to the bus stop, when they have a car outside the house.
Whilst, heavy rail abstraction is concentrated on certain journeys due (in practical terms) to its cheaper fares, especially if continuing your journey across Manchester, it is interesting that with all its current problems - and it is Northern operating the competing sectors - there is no evidence that people are ditching the train for bus. There may be many reason's for this, but unfortunately TGW has identified one major, possibly insurmountable problem, and that is (if we dare admit it), Britain remains a class ridden, image worshipping nation and quite frankly if (as one survey suggested a year or two back), 20%+ of people refuse to travel by bus because it is "socially unacceptable" then we deserve all the congestion problems we get.
But yes, Metrolink has become a major threat with Phase III, although the only hope is that KeolisAmey aren't as open about trying to destroy commercial bus services as RATP were. And then there is the growing threat from the new breed of "edge of the law" taxi companies - whether it be the "Gig economy firms like uber and MyTaxi or the "out of towners" licensed by such as Rossendale and Wolverhampton. Further, threats to bus passengers/non motorists are not confined to the "open" market. There are also more subtle and insidious threats from such as the Media; many politicians and the fact that bus passengers are the only group of transport "consumers" with no powerful or influential lobby.
Taking all this into account, alongside the bus industry's own capability for self destruction, the question is if Deregulation is not curtailed, which straw will finally break the camel's back.
The only argument against this on a countywide basis (ie. bus passengers are revenue units, not individual (tax-paying) human beings, is the overall economy and how different areas figure in all these grand strategies like "Spatial Framework". People don't want to live where there are no accessible jobs or services; developers don't want to build in areas people don't want to live in - which incidentally are usually brownfield sites; Public and private sectors won't invest where there is no growth, and of course, these areas are already the poorer ones with low car ownership.