How do you recruit devs? I need help. (UK)

So I co-founded a telecommunications startup and we're in the process of trying to hire new devs. Been looking for a almost 6 months now. I need help.

So, we're working with several recruiters to help find candidates as well as having job posting on job boards/indeed.co.uk and similar.
The process candidates go through is we receive their CV and then if they seem ok we give them a coding test. Extremely simple but with some hidden subtleties that mean we know how much a dev actually thinking about the problem. Now nearly all the CV's that we get also go onto the test phase. The test is distributed by the recruiters and candidates are given 24 hours to complete and send back to us for marking.

The only issue is that 80/90% of candidates who receive the test fail. Are we being too strict or are devs just that bad at the moment (mainly grads with comps sci degrees, but also some mid/senior level devs too).

It's started to really get to me because somewhere someone is doing something wrong - is it us or is it uni's or it the industry?

I'm open to anything really. I really need advice.
There's only four of us in the startup so a cultural dynamic is also needed.

Finally, it seems like devs are overpriced. Is that due to the industry or just general? I know recruiters will put £1 or 2k on top in order for them to make more money but still. Seems excessive - expecting an average of £28k.

(I don't know a great deal about the industry - by academics I'm an engineer and that industry is quite harsh.)

The Test: I would like to clarify a couple of things with the test. We give the candidates the test (in there own time and at a time of their choosing) for 24 hours. In addition to this, we do not stipulate they can't use google/stack/hash etc, the test itself is a simple word count test, and we allow programmers to use the language they are most familiar with.