Thanks Peter.
"That is how it works". A bit depressing really. Apple have removed one layer of functionality by merging the lock and the sleep. Remember they used to be discrete setting controls in earlier OS's. By "at home", I meant that I rarely take it out and about, and would rather have it set up (manually) to just go when I open it, again, as my other machine with my beloved iOS 5 allows.
Why would anyone ever want to keep it running at full power with the screen on when the cover is shut? It used to still play music etc. with the cover shut ("dozing"). That lock setting simply applies the wrong system control.
I did not say works fine on iOS 8 (for others who are reading) – I said the battery stopped draining when I upgraded to iOS 8.1 with the appropriate settings activated.