'Grey Gardens': Sheila Hancock stars in musical about Jackie Kennedy's poor relations

To those who have never seen it, the cult of Grey Gardens can be hard to explain. The Maysles brothers' original documentary film about two relatives of Jacqueline Kennedy Onassis living in poverty in a decaying mansion in the seaside town of East Hampton came out in 1975 to mixed reviews – The New York Times called it “distasteful and sad” – and played for only a week in cinemas.

Yet in the decades since it became a word-of-mouth hit, screened late at night in New York cinemas, passed round first on video and then, much later, DVD and named in the International Documentary Association's Top 25 Documentaries in 2007. In 2006, a year earlier, a musical based on the film opened on Broadway to glowing reviews and the lives of Big and Little Edie Beale have subsequently been dramatised on HBO, with Jessica Lange and Drew Barrymore in the leads. This week the musical receives its European premiere in London's Southwark Theatre, with Sheila Hancock playing Big Edie and Jenna Russell as Little Edie.

So what exactly is the appeal? I first saw Grey Gardens – the film is named after the ramshackle 28-room house in which the two Edies lived – as a student in a late-night screening in lower Manhattan in the mid-1990s. By that point Little Edie Beale in particular had become an icon on the downtown scene: at the screening I attended drag queens turned up dressed as her, wearing jumpers wrapped round their heads and pinned into place with jewelled brooches and eager fans recited her best bon mots as they appeared on screen, mouthing “It's very difficult to keep the line between the past and the present”, and “They can get you in East Hampton for wearing red shoes on a Thursday”, like a thousand cracked reflections of their heroine. It was a surreal experience and yet, like the film itself, an oddly compelling one.

The strength of Grey Gardens as a documentary is the way that it draws you in, almost against your wishes. There's a hypnotic quality to the story as Big and Little Edie, the former crippled with arthritis, the latter at 58 desperately clinging to her dream of a performing career, constantly circle each other, complaining about whose fault it is that they live in poverty, talking of glorious pasts and of faded dreams, of what might have been but wasn't.

“I only cared about three things: the Catholic Church, swimming and dancing, and I had to give them up,” Little Edie announces at one point. Like so many of her statements it's gloriously quotable, the more so because it is delivered in the sort of Upper Crust American accent, all elongated vowels and lockjaw, that has long since dropped out of use. At the same time we never quite understand what she really gave up or why.

Nor is the history of her failed love life ever quite explained, although there's much talk of dates with Howard Hughes and Joseph Kennedy Jnr. Proudly displayed pictures show that Little Edie was a true beauty in her youth (there are moments too when the camera lights on her face and that faded glory can still be seen).

Instead the Maysles' camera constantly circles to build up a picture of two woman who love and loathe each other, trapped together in a crumbling house with raccoons in the attic and cats running wild, seemingly surviving on corn and crackers leavened with the odd glass of wine or Bacardi and Coke. They spend their days bickering and performing, singing songs and dancing, either oblivious to or unconcerned about the squalor of their surroundings.

“There's an element of voyeurism,” says composer Scott Frankel, who first suggested the idea for a musical version of Grey Gardens to his partners Michael Korie (lyrics) and Doug Wright (book). “At the time the film came out Jacqueline Kennedy Onassis was the most famous woman in the world, and so the idea that her relations were living like this was shocking, but also resonated because of the idea of seeing behind the curtain of Camelot to this other reality.”

It's true that what made Grey Gardens so groundbreaking was the way it blurred the lines between film-maker and subject. These days the rise of reality television means we're used to asking questions about the exploitation of the unstable or unwell, but on the film's release audiences were shocked by the reality of the Beales's life. Awkward questions remain about whether the Maysles are celebrating their eccentricities or exploiting them.

Certainly Little Edie constantly performs for the camera, showing off her drum majorette routines and singing songs – “I knew we could turn the film into a musical because of the love these women had for the Great American Songbook, the way they're always singing Gershwin and dancing,” says Korie. While Big Edith, an amateur singer in her youth who was notoriously cut out of her father's will for turning up at her son's wedding “dressed like an opera singer” (a phrase that neatly encapsulates a certain kind of upper-class disdain for those who refuse to conform), belts out arias from the couch. It should seem tragic and uncomfortable but somehow the two women's enthusiasm – and Little Edie's vitality in particular – makes it almost work. Should we really pity these women for living life on their own terms? Are they unwell or have they simply found a way to survive by ignoring the worst aspects of their reality?

It's worth noting that Little Edie wrote an impassioned defence of her participation in the film to The New York Times (who declined to print it on grounds of mental instability). “So we don't live conventionally, so what?” she wrote. “To my mother and I, Grey Gardens is a breakthrough into the very beautiful and precious thing called life. We're proud of it and couldn't be more pleased.”

Wright, Korie and Frankel are also adamant that the film was not a sideshow. “Before we wrote the musical we sat down with Albert Maysles [the director died last year, aged 88] and he said the one thing you must not do when you're writing this is blame either the mother or the daughter for their predicament, because in doing that you would be doing them a disservice,” says Wright. “While their relationship might be tortured, at its core it was a love story. He stressed that we should never forget that.”

It's clear that Little Edie sees this film as her big chance to show herself to the world. Her gaudy, glorious outfits (the skirts worn upside down, the capes, the turbans, the moulting furs) are as much costumes as clothing. It's that sense of performance that best explains why Grey Gardens has had such a long life so many years after the documentary was first released. People respond to Little Edie's refusal to let life grind her down, to her flamboyant insistence that there is always something worth celebrating, some new show to put on. It might be a very specific story, but it has a universal appeal.

'Grey Gardens', Southwark Playhouse, London, to 6 February (020 7407 0234)