The (then) DVLC always did withhold 'offensive' plates, Those that are deemed inoffensive in the modern age together with those that were withheld for other reasons, are (and have been for a little while) auctioned by the DVLA.
These originally included many earlier plates with fewer characters and no year letter index, (these 'shorter' plates would often be someone's initials or spell short words and would therefore be desirable by people who think that it is important to have their intials on their car). Nowadays, it is the combinations of characters from the current period's release that are auctioned - though any potentially offensive plates are not released at all.
There may well be some plates that were originally released that have only become what is considered "offensive" - if these have remained in use (ie on a currently registered vehicle) they can not be withdrawn.
As the years progress, registration plates will ineviatbly get longer, so one day we may see the eminently suitable SAD T055ER or W 4NKER on some chav-wagon or rich poser's penis extension.