On an intestacy (on or after 1 October 2014) a surviving spouse takes, inter alia, a 50% ABSOLUTE interest in residue.
The other 50% of residue is held on statutory trusts for the issue (ie lineal descendants) of the intestate.
However, you refer to a life interest in residue for the surviving spouse so I assume the deceased died prior to 1 October 2014. In which case the residuary estate is held as to 50% for the surviving spouse for lifetime and subject to this is held on statutory trusts for the issue of the intestate (effectively an interest in remainder). If one of the issue dies post death of the intestate but pre death of surviving spouse their remainder interest would pass to the estate of the deceased beneficiary.
The other 50% of residue is held on statutory trusts for the issue of the intestate; such interests may be immediate but often contingent until attaining age 18. A failure to satisfy the contingency means that the issue is treated as if they had never existed.