Incentives for students to pass A-levels in science, technology, engineering, and maths combined with greater industry involvement are key to reversing declining numbers of technology graduates, according to a report published last week.

There is an urgent need to radically improve the science, technology, engineering, and mathematics (Stem) skills supply chain, according to the Stem Review by the Council for Industry and Higher Education (CIHE) and LogicaCMG.

The report recommends consideration of ideas such as paying students for passing Stem A-levels, government bursaries for Stem students and weighting Stem subjects in UCAS points.

Since 2002 the numbers of Stem graduates has increased, but the numbers taking A-levels has declined, impacting the next generation of graduates.

Between 2001 and 2005, there has been a 47 per cent drop in A-level computer sciences entrants, a 15 per cent decline for maths and a 14 per cent drop for physics.

‘It is difficult to know what payment will change behaviour, but paying Alevel students between £300 and £500 to complete a STEM subject could make a difference,’ said Richard Brown, chief executive of CIHE.

A deficit of qualified teachers, lack of up-to-date laboratories, poor careers guidance and university department closures must be addressed, while having to make early subject choices penalises against STEM subjects, warns the report.

While progress has been made, including golden hellos of up to £10,000 for new Stem teachers and Computer Clubs for Girls, the report says the momentum must be sustained.

However, the report makes it clear that businesses have a big role as well as government.

The review says ‘more coherent messages about the career benefits which the study of STEM subjects can offer need to be conveyed’ by employers.

It also calls for more placements and work experience opportunities to be offered and says that employers could help make the curriculum more exciting and improve patchy careers guidance.

Brown said: ‘Employers have a role in making STEM subjects come alive - even at primary school level. An increasing number are realising they have been short-sighted by not participating and the result is a severe shortage in the numbers of qualified employees.’

‘More employers need to role up their sleeves and get in there. They need to work with the education system,' he said.

Karen Price, chief executive of sector skills body E-skills UK, said: ‘Drawing new talent into the IT workforce is essential to its renewal and growth, and it is vital to improve the quality and relevance of IT-related education.’

‘Employers have a far reaching role to play in helping schools and universities to develop creative and stimulating programmes of study that enable students to develop the full range of skills required for a career in the technology-enabled world,' she said.

Alan Johnson, secretary of state for education and kkills, welcomes the report and its ‘valuable suggestions.’