Is it wrong to pay cash?
Of course it's not, provided you don't do it in order to avoid paying VAT, or because your builder has told you he isn't paying tax.
You pay cash when you buy things in shops, and nobody suggests that it's wrong, so why should it be wrong to pay a plumber in the same way? It's up to the plumber to provide you with an invoice that includes VAT if he's registered for it, but how you pay is up to you.
Dave Hartnett knows that tax evasion goes on, and he knows that cash payments can be an attractive proposition for a householder who is offered a 'discount for cash'.