That's a good point, and I don't really understand what we were doing wrong.

I guess the candidates could 'talk the talk' when we were asking them questions on their CV, or general high-level questions on, say, threading or design patterns; but when it came to the crunch they couldn't write code.

Maybe the candidates were just good at generating CRUD applications and binding data to forms, and have rarely needed to process data. Not denigrating that aspect of software developement at all - it's just not what we need in our department.