Either the in-line heater  valve is bad or has become disconnected from
the dash lever wire.  You can see it if you remove the spare tire and
look up.  If the wire from the dash lever actuates the valve, then it is
not closing fully, which is a fairly common problem as the plastic ages
and shrinks.

Cheap part from the list suppliers, under $6.  Postage costs as much.
--
Stuart MacMillan
Seattle

'84 Vanagon Westfalia w/2.1
'65 MGB (Daily driver since 1969)
'74 MGB GT (Restoring sloooowly)

Assisting on Restoration (and spending OPM):
'72 MGB GT (Daughter's)
'64 MGB (Son's)

Stripped and gone but their parts live on:
'68 MGB, '73 MGB, '67 MGB GT