In a speech to the Institute for Public Policy Research, Chuka Umunna said that BIS was the “right place for a university sector deeply engaged with industry”.
It is widely thought that Michael Gove, the education secretary, has been pitching for control over universities, partly in order to link up policies on fair access.
But Mr Umunna said that Vince Cable, the Liberal Democrat business secretary, had assured him that universities would remain part of BIS’ remit.
“For Vince Cable, Nick Clegg and the Liberal Democrats, this is a test,” he said. “If they let BIS lose responsibility for higher education, it would provide more evidence of them being in office but not in power.
“A time of stalled growth is not the time to break up the so-called ‘Department for Growth’.”
He also said that the coalition “sends out all the wrong signals to students from abroad”, referring to the tougher visa controls brought in by the government that have been criticised by many in the sector.
“Instead of supporting the growth of the sector, this government is creating unnecessary obstacles,” he said.
“More than 60 vice-chancellors have argued that government changes to immigration policy are impacting on legitimate students who contribute billions to the UK economy and help support jobs.”
Mr Umunna said that the government should end “abuse” of the visa system, but not “stop its legitimate use”.
He also floated the prospect of much greater collaboration between universities.
It had been pointed out to him that in the US, the universities of Southampton, Southampton Solent, Portsmouth and Winchester would probably be known as the “State University of Hampshire”, he said.
“Such a university would enable students to study across the sites with a degree tailored to their talents,” Mr Umunna added.